Molson Coors Brewing Company (TAP)

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Molson Coors Brewing (TAP)

Q1 2011 Earnings Call

May 03, 2011 11:00 am ET


David Perkins - Chief Executive Officer of Molson Coors Canada and President of Molson Coors Canada

Peter Swinburn - Chief Executive Officer, President and Director

S. Glendinning - Chief Financial Officer


Dara Mohsenian - Morgan Stanley

Judy Hong - Goldman Sachs Group Inc.

John Faucher - JP Morgan Chase & Co

Kaumil Gajrawala - UBS Investment Bank

Mark Swartzberg - Stifel, Nicolaus & Co., Inc.

Christine Farkas - BofA Merrill Lynch

James Watson - HSBC



Good morning. My name is Alicia, and I will be your conference Operator today. At this time, I would like to welcome everyone to the Molson Coors Brewing Company 2011 First Quarter Earnings Conference Call. [Operator Instructions] Before we get started, I want to paraphrase the company's Safe Harbor language. Some of the discussion today may include forward-looking statements. Actual results could differ materially from what the company projects today, so please refer to its most recent 10-K and 10-Q filings for a more complete description of factors that could affect these projections. The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Regarding any non-U.S. GAAP measures that may be discussed during the call and from time to time by the company's executives in discussing the company's performance, please visit the company's website,, and click on the Financial Reporting tab of the Investor Relations page for a reconciliation of these measures to the nearest U.S. GAAP results.

Now I would like to turn the call over to Mr. Peter Swinburn, President and CEO of Molson Coors.

Peter Swinburn

Thank you, Alicia. Hello, and welcome, everybody, and thank you for joining us today. With me on the call this morning are Stewart Glendinning, Molson Coors' CFO; Tom Long, President and Chief Commercial Officer of MillerCoors; Gavin Hattersley, CFO of MillerCoors; Dave Perkins, CEO of Molson Coors Canada; Mark Hunter, CEO of Molson Coors U.K.; Kandy Anand, President of Molson Coors International; Sam Walker, Molson Coors' Chief Legal Officer; Bill Waters, Molson Coors' Controller; Dave Dunnewald, Molson Coors' VP of Investor Relations.

And for the last time, I can say we're also joined today by Leo Kiely, CEO of MillerCoors. In Leo's 18 years with the company, he has been on more than 70 of these earnings calls. So he has certainly more than paid his dues. We will miss Leo. But while thanking him for his great service to the company, we also welcome Tom Long to his new role and congratulate him on his appointment, effective June 1. So Leo, well done; and Tom, congratulations.

On the earnings call today, Stewart and I will take you through highlights of our first quarter 2011 results for Molson Coors Brewing Company along with some perspective of the balance of 2011. In the first quarter, our company increased underlying after-tax earnings by 17% and expanded margins significantly despite continuing challenges from weak industry volume and accelerating global commodity inflation. We faced particularly difficult volume comparisons in Canada, as we cycled last year's Vancouver Winter Olympics, but our volume trends in the U.S., U.K. and International improved versus recent quarters. Equally important, the strength of our brands drove positive pricing and net sales growth across our company. We've also continued to exceed our cost reduction goals, which provided resources to invest in our brands, grow earnings and generate cash.

Although the first quarter is a low season quarter for our core businesses in both profit and cash generation, these results reflect progress against the growth strategies we laid out for you 2 months ago during our annual Investor Day in New York. To remind you, in that meeting, we said our strategic growth focus would rest on 3 pillars: maximizing the profitable growth opportunities in our core markets, accelerating our push into new markets to grow our brands globally and looking for M&A opportunities that meet our criteria for generating shareholder value and that provide solid growth platforms for our business and brands.

First, in our core markets. Our strategic focus has been on investing behind our brands, delivering value-enhancing innovation and effectively managing our cost structure in our mature markets. Our efforts to strengthen our brands and lead innovation in our markets have helped improve brand health, support positive pricing and generate a lot of excitement in the category.

Here are just some of the current examples. Coors Light has outperformed the competition in the past few years in both market share and average price. Our largest and most international brand grew at low single-digit rate globally in the first quarter. In the U.S., Miller Lite's portfolio performance continue to improve with this brand growing market share in the first quarter.

In Canada, Molson Canadian was up against a difficult comparison cycling the 2010 Vancouver Olympics, but we grew NSR per hectoliter across all markets, and we also launched Molson Canadian 67 into the Québec market in the quarter. Early this year, we also signed our new National Hockey League sponsorship, under which Molson Canadian will have new opportunities to grow in Canada and expand in the U.S. Additionally, we expanded Molson M in Ontario to Western Canada and Keystone Lager to Ontario, while renewing the Molson Export brand with focus in Québec. Overall, we have introduced more new products in Canada in the past 18 months than during the previous 15 years.

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