DOW JONES NEWSWIRES
MillerCoors reported a 40% drop in fourth-quarter net income on
a pro-forma basis due in part to a $65 million write-down on its
Sparks caffeinated alcoholic beverage.
But earnings excluding items at the joint venture - created
midyear to combine the U.S. operations of Molson Coors Brewing Co.
(TAP) and SABMiller PLC (SAB.JO) - jumped 16.5% amid higher
revenue, as price hikes more than offset lower volume.
"While the U.S. beer category softened in the fourth quarter, we
increased pricing and net revenue to deliver strong profit growth,"
said MillerCoors Chief Executive Leo Kiely.
Assuming the venture was in place a year earlier, MillerCoors
reported net income of $54.1 million, down from $90.7 million a
year earlier. Excluding items such as the Sparks write-down, which
occurred in December as the company agreed to stop producing and
selling caffeinated-alcoholic drinks under a settlement with more
than a dozen state attorneys general, earnings rose to $135 million
from $116 million.
The Sparks agreement - in which MillerCoors agreed to remove
caffeine, taurine, guarana and ginseng from the drink - was a blow
to MillerCoors because Sparks had become the dominant product in
the category. But the company said in December it was confident it
could continue to increase Sparks sales.
Net sales increased 3.1% to $1.74 billion amid the price hikes,
helping push gross margin up to 31.9% from 30.2%.
Volume slid 4.4% to 16.1 million barrels. Five out of the
company's six priority brands increased sales to retailers during
the period, with Blue Moon and Keystone Light delivering
double-digit growth. Coors Light increased 1%, posting its 14th
consecutive quarter of growth.
Overall sales to retailers fell 2.3%, reflecting a weaker
quarter for the industry and softness in the Miller Lite brand.
Sales to wholesalers fell 4.3% as distributors cut back their
inventory levels.
Meanwhile, MillerCoors said it is "well on its way" to
delivering its goal of $500 million in annual savings by the third
year of combined operations.
Molson Coors will release its fourth-quarter results later
Tuesday morning.
-By Kevin Kingsbury and Kerry R. Grace, Dow Jones Newswires;
201-938-2136; kevin.kingsbury@dowjones.com