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MillerCoors reports increase in 1Q profits

May 3, 2011
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SABMiller plc, London, and Molson Coors Brewing Co., Denver, reported that MillerCoors’ first quarter underlying net income, excluding special items, increased 8.7 percent to $236 million in the United States and Puerto Rico versus first quarter 2010. The increase was driven by positive pricing growth, continued synergies and cost savings and favorable brand mix, the company said.

“Our continued success in building brand equity, driving positive mix as well as strong cost management contributed to a good start out of the blocks in 2011,” said Leo Kiely, chief executive officer of MillerCoors, in a statement. “We said topline growth would be our priority and we believe our strategic focus within premium lights on innovation, organic revenue growth and marketing execution are delivering wins in the marketplace.”

MillerCoors reported total net sales of nearly $1.7 billion, which were in line with first quarter 2010, it said. Its first quarter domestic net revenue per barrel, excluding contract brewing and company-owned distributor sales, increased 2.1 percent, MillerCoors reported. An increase also was reported for total cost of goods sold per barrel, which amounted to 1.2 percent.

The company also reported that its domestic sales to retailers (STRs) decreased 1.4 percent due to continued industry headwinds. The drop represents an improved volume trend versus the previous five quarters, MillerCoors said. Its domestic sales to wholesalers decreased 2.5 percent, the company reported.

MillerCoors’ Premium Light STRs were level with Coors Light increasing in low-single digits, while Miller Lite improved, but was still down slightly, the company said. MGD 64 volumes decreased by double digits. Coors Banquet drove performance in the company’s Premium Regular portfolio, which includes Miller Genuine Draft. The portfolio was down mid-single digits, MillerCoors reported.

The company’s Craft and Import portfolio, which is managed by Tenth and Blake Beer Co., increased 14 percent, which was driven by double-digit growth in the Moon and Leinenkugel’s brands. Its Peroni Nastro Azzurro import brand reported high single digit increases, MillerCoors said.

The Below Premium portfolio dropped low single digits in the quarter. The company attributed the decrease to its “mind the gap” strategy, which delivers a reduced gap between premium and below premium segment pricing with the aim of uptrading within the MillerCoors portfolio, it said.

In the first quarter, synergy savings of $23 million were delivered. The savings were driven by plant initiatives, lower inbound and outbound freight costs, and reductions in packaging and brewing materials, MillerCoors said. To date, the company reported annualized synergies of $528 million, which surpasses its original commitment to deliver $500 million in synergies by June 30, 2011.

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