Molson Coors warns of challenge ahead; shares fall
(Reuters) - Molson Coors Brewing Co (TAP.N) warned on Wednesday that the current quarter would be the most challenging of the year, with higher costs, increased spending and weak economic conditions, and the beer maker's shares fell 3.7 percent.
The share decline outpaced that of the wider market, which was down more than 2 percent a day after the re-election of President Barack Obama. Comments by the European Central Bank president weighed on market sentiment.
Molson, the company behind beers such as Coors Light and Blue Moon, said consumer demand for beer across its businesses declined in the third quarter.
The Central European business that the brewer acquired earlier this year, which makes Staropramen beer, saw volume fall due to lower demand, particularly in September.
In the current fourth quarter, Molson said it expects difficult comparisons with year-ago results in some regions, as well as higher ingredient costs in Central Europe and significantly higher "marketing and business transformation costs" in the United States designed to improve information systems and business processes.
Third-quarter net income rose to $198.4 million, or $1.09 per share, from $197.4 million, or $1.06 per share, a year earlier.
Excluding special items, earnings were $1.37 per share. On that basis, analysts on average were expecting $1.34, according to Thomson Reuters I/B/E/S.
Net sales increased 25 percent to $1.20 billion, fueled by the Central European business, which makes the Staropramen brand.
MillerCoors, the combined U.S. operations of Molson Coors and SABMiller (SAB.L), reported a nearly 14 percent rise in third-quarter net income as it sold more expensive beers.
Molson's Canadian, British and international businesses had lower earnings.
Sales to retailers fell 5.1 percent in Canada, 4.8 percent in Britain and 2.4 percent in the United States. It cited a shift in the timing of Canada Day in Molson's calendar, weak economic conditions in Britain, and one less selling day in the United States.
In the first month of the fourth quarter, sales to retailers fell at a high-single-digit rate in Canada, hurt by industry weakness and a National Hockey League lockout. In Britain, sales in that month fell by a low-double-digit rate, while U.S. sales were flat.
For the full year, Molson said its costs should rise at a high-single-digit rate in Canada and Britain due to higher pension costs, higher ingredient costs, a shift in consumption toward higher-cost brands and packages, and other factors.
Molson shares were down $1.60 to $41.60 on the New York Stock Exchange.
(Reporting By Martinne Geller in New York; Editing by Jeffrey Benkoe, Maureen Bavdek and John Wallace)