Fortunes have been mixed for Molson Coors Brewing Co., since two family- owned brewers, Adolph Coors Co. in Golden and Molson Inc. in Montreal, merged in February 2005.
While the merger is expected to save the company $250 million by 2008, analysts said they were surprised by the brewing company’s lackluster first-quarter earnings.
Molson Coors reported a loss of $30.2 million earlier this month on revenue of $1.15 billion, up from $1.05 billion a year earlier. A rise in domestic sales in the first three months of 2006 was sharply offset by declines in United Kingdom sales.
“It’s quite stunning they can have that kind of sales growth and still not meet earnings,” Caroline Levy, a UBS analyst who follows the company, said Wednesday. “It should not have been this bad. Investors are very disappointed.”
Chief executive Leo Kiely said rising energy and commodity prices, along with the fickle tastes of younger consumers, caused the weak results.
“The spirits business got a jump on beer with the ‘echo boom’ generation,” Kiely said in remarks following the company’s annual meeting Wednesday in Denver, where its U.S. headquarters is based. “We’re directly competing for a share of the stomach with all the vodka flavors.”
Molson Coors’ moribund beer sales were mirrored across the board, with domestic beer volume declining slightly in 2005, according to the Brewers Association in Boulder.
But other beverage categories increased their sales. Spirits volume rose 3.3 percent last year, the trade group said; craft-beer volume rose 9 percent; imports rose 7.2 percent; and wine grew 2.9 percent.
Big summer holidays are likely to drive up sales of Molson Coors’ most popular beverages, including Coors Light, Kiely said.
Coors shares closed down 31 cents Wednesday at $65.84. Since reaching a 2005 high of $79.50, the stock has fallen 17 percent.
Shareholder Art Burzlaff suggested at the meeting that the brewer come up with a new wine/beer beverage with a higher alcohol content. Molson Coors makes the Zima malt beverage, along with various Molson, Coors and Carling beers.
Molson Coors is the world’s fifth-largest brewer, with net sales of more than $6 billion.
Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.
