(London ENGLAND and Denver, CO) - SABMiller plc and Molson Coors Brewing Company reported that MillerCoors second quarter underlying net income increased 9.1 percent to $436.0 million versus prior year, driven by positive pricing, favorable brand mix and cost management.
“As our major summer marketing programs kicked off during the second quarter, we saw sequential improvement in retail sales on our premium light brands, highlighted by the strong growth of Coors Light,” said MillerCoors Chief Executive Tom Long. “We also delivered double digit growth from Tenth and Blake as we scale brands like Blue Moon and Leinenkugel’s Summer Shandy to meet changing consumer tastes. Positive brand mix shifts – combined with our continued attention to cost control and sharp revenue management – were key to delivering another profitable quarter. We continue to make progress against our strategy of strengthening our core business, while evolving our portfolio to match consumer demand.”
Second Quarter Highlights
Unless otherwise indicated, all amounts are in U.S. dollars and calculated in accordance with U.S. GAAP. All percentages are versus the prior-year comparable period and include MillerCoors operations in the U.S. and Puerto Rico.
- Underlying net income (a non-GAAP measure) increased 9.1 percent to $436.0 million.
- Total net sales increased 4.3 percent to $2.224 billion.
- Domestic net revenue per barrel, excluding contract brewing and company-owned distributor sales, increased 3.6 percent.
- Total cost of goods sold (COGS) per barrel increased 2.5 percent.
MillerCoors domestic sales-to-retailers (STRs) were down 1.4 percent, a slight improvement versus the first quarter trend as the U.S. economic environment remained challenging and unemployment among our key consumer demographics worsened. Domestic sales-to-wholesalers (STWs) increased 0.3 percent.
Brand Highlights for the Second Quarter
Premium Light STRs were virtually unchanged in the second quarter versus prior year, an improvement compared to the first quarter 2012. Coors Light continued to post solid results, leading all major premium light brands with low-single digit growth for the quarter. Innovations such as the Coors Light Silver Bullet Aluminum Pint have contributed significant new volume to the brand. In the early stages of the new “It’s Miller Time” campaign, Miller Lite declined low-single digits, while showing incremental trend improvement versus the first quarter. Twelve and 16 oz. can sales have increased in the low-single digits for the brand, attributable to the launch of the Punch Top Can innovation. Miller64 declined low-double digits as new branding, packaging and marketing programs rolled out nationally.
Tenth and Blake Beer Company continued to grow the MillerCoors craft and import portfolio by double digits in the quarter driven primarily by Leinenkugel’s. The Leinenkugel’s franchise is leading the craft segment in share growth, primarily via double-digit growth of Leinenkugel’s Summer Shandy. Blue Moon also continued to show strong volume growth. Peroni Nastro Azzurro grew mid-single digits and continued to show strength.
The Below Premium portfolio declined mid-single digits, as the company maintained competitive price gaps between Premium and Below Premium brands. Miller High Life continued to build brand awareness with its “Welcome Veterans Back to the High Life” program and the unveiling of its new red, white and blue packaging. Keystone Light continued to drive its “Always Smooth” positioning through digital engagement.
The Premium Regular portfolio was down mid-single digits with a double-digit decline by Miller Genuine Draft partly offset by mid-single-digit growth of Coors Banquet.
Financial Highlights for the Second Quarter
- Domestic net revenue per barrel grew 3.6 percent as a result of strong net pricing and favorable mix.
- Total company net revenue per barrel, including contract brewing and company-owned distributor sales, increased 3.4 percent.
- Third-party contract brewing volumes were up 6.7 percent.
- Total COGS per barrel increased 2.5 percent driven by packaging innovation, brand premiumization and brewing material costs, partially offset by tight cost control and savings initiatives.
Marketing, general and administrative costs increased 3.1 percent, driven by slightly increased marketing spending related to the Miller64 brand re-launch and increased spending behind new products and packaging innovations, partially offset by lower information systems costs.
In the second quarter, $32 million of cost savings were achieved versus prior year, primarily within the integrated supply chain.
Depreciation and amortization expenses for MillerCoors in the second quarter were $73.0 million and additions to tangible and intangible assets totaled $47.6 million.
During the second quarter, special items reflect the benefit of a $2.3 million pension curtailment gain.