NEW YORK—Molson Coors Brewing Co. sold fewer beers around the world in the fourth quarter, but its profit more than doubled as the company held onto price hikes it made during the recession and benefited from a one-time drop in its tax rate.
Sale volumes in the brewer’s strongholds of Canada and Britain have been slipping for months as people spend less on beer and trips to bars. But the company’s fourth-quarter downturn was steeper in the U.S. than it predicted, CEO Peter Swinburn said.
“It’s really linked to unemployment,” he told The Associated Press in an interview. “It seems to be once we get above 8 or 9 percent unemployment, that really begins to bite. Obviously, we’re in that territory at the moment.”
Swinburn said he expected the sluggish environment to continue in the first half of 2010. The U.S. unemployment rate was 9.7 percent in January, according to government figures.
The company sold 4 percent less beer by volume worldwide in the fourth quarter, but its net sales rose 11 percent to $820.0 million, helped by higher prices.
Shares of the maker of brands like Blue Moon and Coors Light fell $1.33, or 3.22 percent, to close at $39.98 Tuesday.
The brewer earned $218.2 million, or $1.17 per share, in the quarter that ended Dec. 26. That’s up from $87.6 million, or 48 cents per share, in last year’s fourth quarter.
Excluding such one-time items, the company earned $190.3 million, or $1.02 a share, falling short of the expectations of analysts polled by Thomson Reuters, who typically exclude one-time items.
Analysts predicted earnings per share of $1.10 on revenue of $784.4 million.
Morgan Stanley Research analyst Dara Mohsenian, who said Molson Coors is performing “at the low end of its global peers,” maintained an “equal-weight” rating on the stock.
Faced with a smaller market for its products, Molson Coors is holding firm on some pricing, particularly in Britain, so it can make more money on what it does sell.
The company, based in Denver, is also coming out with new products, such as a low-calorie beer in Canada, and working to attract a range of consumers with products selling for a variety of prices.
“The consumer is looking for value, and so often the lowest common denominator is price,” Swinburn said. “But, for value, it’s interesting, new products (that) people are willing to pay for.”
Swinburn said the company doesn’t want to discount its brands now because that could make consumers see less value in them now and once the economy improves.
In Canada, sales to retailers fell 1.2 percent in the quarter, slightly better than the industry there. Costs fell 3 percent as prices to make and sell beer dropped. Coors Light grew, but Molson Canadian, Dry and export brands fell. Pretax income there dropped 12 percent, minus the impact of foreign currency
In Britain, volume fell 9.3 percent in the quarter, far ahead of the industry’s 4 percent drop. Molson Coors’ decision to hold firm on pricing also contributed to the decline. The cost of making beer there increased 12 percent in local currency.
In the U.S., where the company has its MillerCoors joint venture with SABMiller’s U.S. unit, sales to retailers fell 3.6 percent. Net revenue decreased 1.6 percent to $1.71 billion, although pricing was strong.
For the fiscal year, the company earned $720.4 million, or $3.87 per share, up from $378.7 million or $2.07 per share, the previous year.
Its sales fell by a third to $3.03 billion, from $4.77 billion the previous year. The company spun off its U.S. unit into the MillerCoors joint venture in July 2008.
