Molson Coors swings to US$34-million Q3 loss on charges for European brands

MONTREAL – The Molson Coors Brewing Co. swung to a US$34.4-million net loss in the third quarter as it faced lower demand and the impact of a large impairment charge in Europe.

The loss, equivalent to 19 cents per share, compared with a profit of US$134.3 million or 74 cents per share a year ago.

Excluding one-time items, including a US$360-million impairment charge, adjusted profit fell 2.7 per cent to US$271.5 million or $1.46 per diluted share for the period ended Sept. 30, two cents short of analyst expectations. The company earned $279.1 million or $1.51 per share in adjusted profits a year ago.

Molson Coors (NYSE:TAP, TSX:TPX.B), which has dual headquarters in Montreal and the Denver area and reports in U.S. dollars, said the decrease was the result of lower volumes, unfavourable currency fluctuations and higher taxes, which were partially offset by higher prices and cost reductions.

Revenues dipped slightly to US$1.17 billion.

Worldwide beer volume decreased 3.4 per cent to 16.4 million hectolitres.

Chief executive Peter Swinburn said its flagship Coors Light brand experienced a one per cent decrease in volume due to weak performance in Canada and the United States.

“We are implementing plans to reverse the trends in these markets,” he said during a conference call Thursday.

In Canada, underlying pretax income decreased 8.9 per cent to $132.6 million from $145.5 million a year earlier with the lower Canadian dollar having a $5-million negative impact.

Sales-to-retail decreased 5.9 per cent, primarily due to the termination of the Modelo joint venture earlier in the year, lower industry volume and increased promotional activity. Molson Coors said its market share decreased about a half percentage point as overall sales volume decreased 2.2 per cent.

In the United States, Molson Coors’ share of MillerCoors’s underlying profit increased 2.8 per cent to $159 million despite a 3.7 per cent decline in sales to retailers.

European adjusted pretax income increased 4.4 per cent to $101.4 million as volumes decreased 4.6 per cent. International operations lost $2.7 million compared to $2.1 million a year earlier as higher marketing drove double digit revenue growth.

Molson Coors’ portfolio includes Coors, Coors Light, Molson Canadian, Carling, Blue Moon, Keystone and Rickard’s.

On the New York Stock Exchange, Molson Coors shares closed up $2.89 or 3.9 per cent at US$77.06, while in Toronto the issue was up $3.44 or 4.07 per cent at C$88.

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