UPDATE 2-Molson Coors profit beats on price increases

Wed Nov 3, 2010 8:28am EDT

* Q3 adj EPS $1.28 tops Street view of $1.13/shr

* Q3 net sales rose to $875 mln from $853.7 mln

* Worldwide volume down 4 pct

* Sees some 3rd-qtr profit drivers absent in 4th qtr (Rewrites, adds adjusted earnings, analysts' estimates, volume, comments on fourth quarter, share activity)

NEW YORK, Nov 3 (Reuters) - Molson Coors Brewing Co (TAP.N) reported higher-than-expected quarterly profit on Wednesday, as increased beer prices and cost savings helped offset the impact of declining sales volume.

But Chief Executive Officer Peter Swinburn said he expects about one-fourth of the drivers of third-quarter profit growth will either not carry over to the current fourth quarter, or will reverse.

The company also warned that its U.S. distributors will likely reduce their inventories in the fourth quarter more than they did last year, and that its U.K. marketing and promotional expenses will will be significantly higher, due in part to timing differences.

The maker of Coors Light, Molson Canadian and Blue Moon beers said third-quarter net income was $256.1 million, or $1.37 per share, up from $235.3 million, or $1.26 per share, a year earlier.

Excluding items, Molson earned $1.28 per share, topping analysts' average estimate of $1.13 per share, according to Thomson Reuters I/B/E/S.

The company said price increases, cost reductions and margin expansion drove double-digit earnings growth in all of its key markets of Canada, the United States and Britain.

Net sales rose 2.5 percent to $875 million, even as worldwide volume fell 4 percent.

Earlier on Wednesday, MillerCoors, the combined U.S. operations of SABMiller PLC (SAB.L) and Molson Coors, said its net income rose 37 percent. [ID:nLDE6A119Y]

Molson shares closed at $47.22 on Tuesday on the New York Stock Exchange, up nearly 23 percent from the 52-week low touched in February. The Dow Jones U.S. Beverages Index .DJUSBV rose 15 percent over the same period. (Reporting by Martinne Geller, editing by Gerald E. McCormick, Dave Zimmerman)