MillerCoors Delivers Double Digit Underlying Profit Growth In Third Quarter

7 Nov 2013 --- SABMiller plc and Molson Coors Brewing Company have reported that MillerCoors posted underlying profit growth of 11.7 percent and a 4.1 percent increase in domestic net revenue per barrel versus the same quarter in the prior year.

“Led by Redd’s, Leinenkugel’s and Blue Moon, our strategy to grow share in the high-margin and fast-growing above premium space is driving excellent sales mix,” said MillerCoors Chief Executive Officer Tom Long. “The quality of our beers continues to be second to none and we are pleased consumers and customers are responding.  And even though we continue to increase total company net revenue and total company net income, we are not satisfied with the on-premise distribution or volume performance of our premium light brands.  Our recently announced restructuring will reduce our fixed cost base and allow increased brand investment moving forward, particularly on our premium lights.”

Domestic net revenue per barrel grew 4.1 percent for the quarter as a result of higher net pricing and favorable brand mix.  Brand mix favorability was driven largely by the success of Redd’s and Leinenkugel’s Shandy variants.

Total company net revenue per barrel, including contract brewing and company-owned distributor sales, increased 3.9 percent. Third-party contract brewing volumes were up 2.8 percent.

Total COGS per barrel increased 3.8 percent, driven by commodity and brewery inflation and higher costs associated with brand innovation.

Marketing, general and administrative costs decreased by 3.4 percent for the quarter, driven primarily by lower pension expense, a reduction in costs associated with the business transformation initiative and less promotional activity, which more than offset increased investments in support of new brand offerings.

In the third quarter, MillerCoors achieved $33 million of cost savings, primarily related to procurement, logistics and brewery efficiencies.

Depreciation and amortization expenses in the third quarter were $71.6 million, and additions to tangible and intangible assets totaled $88.1 million.

Severance costs of $15.0 million related to a restructuring were recorded as a special item in the quarter.