Molson Coors profit falls on charges; shares down
NEW YORK (Reuters) - Molson Coors Brewing Co (TAP.N) TAPa.TO said on Tuesday quarterly net profit fell slightly on one-time items and weak sales in Britain, helping to push the brewer's shares down as much as 4 percent.
The maker of Molson Canadian and Coors Light said third-quarter net income dipped nearly 1 percent to $134.7 million, or 74 cents per share, from $135.8 million, or 78 cents per share, a year earlier.
Excluding items, earnings were 95 cents a share, topping the analysts' average forecast of 92 cents, according to Reuters Estimates. The company cited price increases, a lower tax rate, the weak dollar, cost cutting and growth of its brands, which include Blue Moon, Carling and Keystone.
Also on Tuesday, Sam Adams maker Boston Beer Company Inc (SAM.N) reported a sharp drop in quarterly net income on higher costs for ingredients and packaging material, and its shares fell 25 percent.
In Molson's largest markets, Canada and the United States, the company said it had gained share and sales had increased.
But UBS analyst Kaumil Gajrawala called the results mixed, noting the earnings beat came from a lower-than-expected tax rate. He also said while sales rose in the United States and Canada, which together account for about three-quarters of the company's total, margins in both regions were below his expectations.
Net sales in the quarter rose 6.9 percent to $1.69 billion, helped by the weak dollar, which boosts the value of overseas sales when they are converted to dollars for inclusion on the company's income statement.
Sales by volume fell 0.2 percent to 11.2 million barrels, due mostly to the impact of colder-than-usual UK weather.
Sales to retailers rose 2.1 percent as a 6.4 percent increase in the United States and a 0.8 percent rise in Canada offset a 6.9 percent decline in the UK.
U.S. net sales per barrel rose 2.5 percent as the company raised beer prices to offset higher costs of commodities such as grain and aluminum.
Goldman Sachs analyst Judy Hong said sales were much better than she had expected and she would recommend buying Molson shares on their weakness. Hong has a "buy" rating on the stock.
"The key item to focus on is the very strong performance in the North American businesses, where sales trends remain strong and Molson Coors is gaining share, pricing looks healthy and cost savings are driving solid operating profit growth," Hong wrote in a research note.
As for Boston Beer, it reported a 46 percent drop in quarterly net income, and its earnings were 21 cents per share, half the average analyst estimate of 42 cents. It also lowered its full-year outlook and said cost pressures would erode margins further going into 2008. Its shares closed at $38.55.
STRENGTH EXPECTED TO CONTINUE AT MOLSON
Molson Chief Executive Leo Kiely said third-quarter U.S. sales reflected the best quarter in a long time, and added in an interview that trends appeared to be even stronger for the start of the fourth quarter, which is usually a smaller quarter for beer companies than the third. Continued...
