TAPA Molson Coors Brewing Company

By Tripp Mickle 

Molson Coors Brewing Co. reported a profit in the first quarter after its U.S. joint venture, MillerCoors LLC, succeeded in stemming volume declines of Miller Lite and Coors Light for the first time since 2008.

Miller Lite and Coors Light volumes were flat in the U.S. It is the first time in several years they haven't lost ground to craft brews.

MillerCoors said the brands, which account for more than 50% of profits, have now posted four consecutive quarters of market share gains in the light beer category, which is dominated by Anheuser-Busch InBev NV's Bud Light.

MillerCoors, which is co-owned by Molson and SABMiller PLC, said the strong performance of Miller Lite and Coors Light helped the joint venture increase profit 10% to $335.3 million from $304.6 million. The company also benefited from lower fuel and aluminum costs.

MillerCoors' improved performance comes as Molson works to close a $12 billion deal to assume full control of the joint venture. The acquisition is expected to close in the second half of the year after AB InBev NV completes its roughly $108 billion deal for Molson's joint venture partner, SABMiller.

Excluding numerous special items, Molson said profit rose to $110.3 million, or 54 cents, from $86.1 million, or 46 cents a share. Analysts polled by Thomson Reuters had forecast 43 cents a share in earnings.

Sales fell 6.1% to $657.2 million in the period, but exceeded analysts' expectations for $626 million in sales. The company said declines in the value of foreign currencies like the Canadian dollar had a negative impact on sales of $43.5 million.

In addition to benefiting from MillerCoors results, Denver-based Molson said it increased non-U.S. beer volume 1.2% to 9.9 million barrels. The increase was driven largely by the brewer's European business, which increased sales volume 5.2% to 3.4 million barrels.

Strong sales of the company's Carling and Coors Light brands helped Molson gain share in a European market where industry volumes were flat.

The company's Canadian business, which accounts for about 40% of sales, continued to struggle. Volumes declined 4.7% to 1.2 million barrels as sales slid due in part to weak economic conditions in provinces like Alberta, where low oil prices have triggered layoffs.

"Consumers (in Canada) generally are choosing to invest their hard-earned dollars in some of the craft segments," said Molson Chief Executive Mark Hunter during a call with analysts. "The exception to that has been Alberta, where the economy is under a lot of pressure."

For the period ended March 31, Molson said profit rose to $158.8 million, or 78 cents a share, from $81.1 million, or 43 cents a share, a year earlier.

The brewer's profit for the quarter was aided by a $108.6 million gain on the $110.4 million sale of its Vancouver brewery. It also recognized $15.5 million in charges related to the planned closure of MillerCoors' Eden, N.C. brewery and a $51.4 million loss related to the costs of its pending acquisition of MillerCoors.

Anne Steele contributed to this article.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

May 03, 2016 13:41 ET (17:41 GMT)

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