DENVER—Molson Coors Brewing Co., one of the world’s largest brewers, said Tuesday its second-quarter profit rose 18 percent fueled by strong sales of Coors Light in the U.S. and Canada.
The Denver-based brewer’s operations in Europe, however, turned in a weaker performance compared with the year-ago quarter due to the timing of the World Cup soccer tournament in 2006 and poor weather.
The results beat Wall Street estimates, although some analysts noted the company benefited from shifts in inventory in North America and a lower tax rate.
In an interview with The Associated Press, President and Chief Executive Officer Leo Kiely said he was pleased with the results overall, but he acknowledged the brewer faces challenges in the United Kingdom, where the pub industry is declining as more consumers favor take-home products.
“You have to play the hand that’s dealt,” he said. “We’ve got a tremendous business in the U.K. and tremendous brands. The industry sort of reality is just very tough.”
For the quarter ended July 1, net income rose to $185 million, or $2.04 per share, from $156.2 million, or $1.81 per share, in the same quarter a year ago.
The most recent results included charges of $25.4 million, a gain on the sale of an equity interest in a Canadian business and a one-time tax benefit. Excluding special items, Molson Coors earned $176.1 million, or $1.94 per share.
Revenue rose 6 percent to $1.68 billion from $1.58 billion in the second quarter of 2006.
Analysts polled by Thomson Financial had forecast earnings of $1.72 per share on revenue of $1.63 billion.
Sales volume rose 0.7 percent to 11.5 million barrels across the company while the cost of goods sold rose 5.1 percent to $966.9 million, the company said.
Sales to retail increased 1.6 percent in the United States, gained 1.1 percent in Canada and slipped 7.5 percent in Europe.
Kiely said the company closed a brewery in Edmonton, Alberta, where workers were on strike after Molson Coors lost a production contract. He also noted the operation was limited to a bottle line packaging capacity while the market is shifting more to products in cans.
“It was a confluence of an unusual set of circumstances,” Kiely said. “It wasn’t something that we might have even anticipated a year and a half ago.”
In the United States, the company reported low single-digit growth of Coors Light, mid-single growth of Keystone Light and double-digit growth of Blue Moon.
The brewer said strong growth in Coors Light and other brands in Canada was offset by a decline in premium discount and unsupported products. It marked the first time in four years that Molson Coors’ Canada business increased quarterly market share.
During the first six months, Molson Coors had net income of $189.4 billion, or $2.10 a share, compared with net income of $126 billion, or $1.46 a share, in the year-ago period. Revenue rose to $2.9 billion from $2.74 billion.
For the full year, Molson Coors estimated free cash flow of $170 million, which is equal to cash minus capital expenditures. The figure includes the effect of buying back United Kingdom kegs, a one-time cost of $24.5 million related to a debt tender last month and a $50 million voluntary cash contribution to the U.S. pension fund that occurred in the second quarter.
Molson Coors’ stock price dropped $1.18, or 1.3 percent, to close at $90.99 Tuesday. In the past year, it has ranged from $64.25 to $99.24 a share.
———
On the Net:
Molson Coors Brewing Co.:
