MONTREAL – Molson Coors is preparing to modernize its Canadian brewing capacity after finding a buyer for its Vancouver site and preparing to take action on its historic operations in Montreal.
“Overall, I think we’ve got a very strong plan for reshaping the supply chain in Canada,” Stewart Glendinning, CEO of Molson Coors Canada, said Thursday during a conference call.
Molson Coors (TSX:TPX.B, NYSE:TAP) beat expectations even though its adjusted profit decreased 4.3 per cent to US$259.9 million in the third quarter due to currency swings and the termination of distribution agreements including Miller brands in Canada.
The Denver and Montreal-based company reported Thursday that it earned US$1.40 per diluted share, compared with US$1.46 per share or US$271.5 million a year earlier.
Meanwhile, Molson said it has found a purchaser for its 55-year-old Vancouver brewery, where beer bottling was discontinued earlier this year. It plans to use the undisclosed proceeds to build a new plant over the next two to three years somewhere in the province for its brewing and distribution operations. Until then, it will lease the current site from the new owner.
A feasibility study expected to be completed in the new year will determine whether it upgrades the current location in Old Montreal or builds a new site.
Glendinning told analysts that the new Vancouver brewery will be more cost-effective and help to drive higher earnings.
Molson Coors wouldn’t say specifically if it plans to reduce Canadian brewing capacity to meet declining consumption.
“You can rest assured that rightsizing our capacity is a key part of our plan,” Glendinning said, adding the new operations would be more flexible to accommodate small and large brew formats.
The company declined to comment during the conference call on media reports that it has entered into negotiations with SABMiller to purchase its 58 per cent stake in MillerCoors. British-based SABMiller is expected to sell its stake in the U.S. joint venture with Molson Coors in order to complete a US$106-billion takeover of the company by Anheuser-Busch InBev.
Analyst Mark Swartzberg of Stifel Nicolaus expects the joint venture partners will reach a deal by next Wednesday, the current deadline for SABMiller and InBev deal.
In the quarter, Molson Coors swung to a US$16.6 million net profit including one-time costs, from a loss of US$34.4 million in the prior year.
Net sales fell almost 13 per cent to US$1.02 billion for the three months ended Sept. 30, but were up 0.7 per cent excluding currency fluctuations.
Molson Coors was expected to earn $1.28 per share in adjusted profits on US$1.01 billion of revenues, according to analysts polled by Thomson Reuters.
In Canada, adjusted pretax profit decreased 18.9 per cent to US$107.5 million, but were down 5.4 per cent when adjusting for the lower Canadian dollar.
Sales volume was four per cent lower due to the termination of the Miller contract.
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