The new MillerCoors joint venture pumped significant profits back into Denver-based Molson Coors Brewing Co. during the third quarter.
Molson Coors receives 42 percent of the profits from a joint venture with SABMiller Plc to produce and distribute the brands of both companies in the United States.
That translated into $92.1 million in pretax income during the third quarter for Molson Coors, a 13.7 percent increase from what U.S. sales contributed a year earlier before the combination.
“Despite the challenging U.S. economy and ongoing changes to the competitive dynamics in the U.S. beer industry, our first quarter of combined performance demonstrates the tremendous potential of our new company,” Miller Coors chief executive Leo Kiely said Wednesday in an earnings announcement.
With U.S. beer sales up only 0.7 percent during the quarter, Chicago-based MillerCoors benefited as an estimated cost savings of $550 million over the first three years began to kick in.
One example — by brewing multiple brands at eight plants spread across the country, the joint venture expects to reduce transportation costs.
Molson Coors CEO and president Peter Swinburn told analysts that the fundamentals of the company remain strong despite higher commodity prices and difficulties with sales in the United Kingdom.
The company’s retail beer sales rose 3.7 percent in Canada and slumped 3.1 percent in the United Kingdom on a comparable basis.
Molson Coors net income increased 28.6 percent to $173.2 million for the third quarter. But the company doesn’t plan to repatriate the cash to shareholders in the near future, given the turmoil in credit markets.
“Getting cash in the marketplace is extremely difficult,” Swinburn told analysts. “We don’t think it would be prudent to use our cash to buy back shares.”
Molson Coors shares rose $3.20, 8.9 percent, to close at $41.78 on a day when the broader market indexes each lost more than 5 percent.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
