MillerCoors reports challenging fourth quarter

February 9, 2010
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SABMiller plc and Molson Coors Brewing Co. today reported double-digit underlying earnings growth for MillerCoors in its first full year of operations ended Dec. 31, 2009.
 
MillerCoors’ full-year underlying net income increased 18.4 percent to $138.7 million, while fourth-quarter underlying net income decreased 21.6 percent to $106.1 million vs. prior year. Softening industry volumes and resulting cost deleverage partly were offset by pricing, synergies delivery and reductions in marketing, general and administrative costs in the fourth quarter, the company said.
 
"It's tough out there, and we saw the effect of ongoing economic pressure and unemployment on beer sales, especially in the fourth quarter," said MillerCoors’ Chief Executive Officer Leo Kiely. "But we stayed focused on our strategy and invested to grow four out of our six national focus brands in 2009. Our people made it happen, delivering strong profit growth and exceeding our synergy commitments in the midst of a recession."
 
Underlying net income, excluding special items, decreased 21.6 percent to $106.1 million vs. the prior year comparable quarter, while full-year underlying net income, excluding special items, increased by $138.7 million or 18.4 percent.
 
Total net revenue declined by 1.6 percent to $1.7 billion vs. fourth quarter 2008, while full-year total net revenue increased by 1.7 percent to $7.6 billion.
 
Domestic net revenue per barrel increased 2.3 percent in the fourth quarter, while full-year domestic net revenue per barrel increased 3.7 percent.
 
Full-year cost synergies were $245 million, bringing cumulative synergies to $273 million since July 1, 2008, the company says.
 
In the fourth quarter, MillerCoors domestic sales-to-retailers, declined 3.6 percent primarily due to poor industry and economic conditions, it says. For the full-year, sales-to-retailers were down 1.7 percent.
 
Fourth-quarter sales-to-wholesalers declined 4.2 percent driven by lower retail sales and a reduction in contract brewing volumes, it said. Full-year sales-to-wholesalers were down 1.7 percent.
 
Fourth-quarter premium light brand volumes for Miller Lite, Coors Light and MGD 64 were down mid-single digits due to declines in Miller Lite and, to a lesser extent, Coors Light, which were partially offset by the continued success of MGD 64.
 
MillerCoors craft and import portfolio fell slightly in the quarter, despite high-single-digit growth in Blue Moon and low-single-digit growth in Peroni Nastro Azzurro. The domestic above-premium portfolio — which includes Miller Chill, Sparks and Killian's Irish Red — continued to experience double-digit declines.
 
The below-premium portfolio was down slightly compared to the prior year fourth quarter despite high-single-digit performance from Keystone Light. Miller High Life experienced a slight decline, and Milwaukee's Best was down high-single digits.

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