Molson Coors’ 2nd-qtr net climbs 27 pct on price increases, tax benefit but volume slips

Molson 2Q net income climbs 27 pct on price hikes

NEW YORK — Molson Coors Brewing Co. sold more beer in Canada and Britain in the second quarter, helped by warmer weather and World Cup fans wanting to drink, and net income rose 27 percent on price increases and lower taxes.

But gains in those countries — which had been weak due to the economy — were eclipsed by sagging U.S. sales. The maker of Coors Light and Carling sold 0.7 percent less beer worldwide.

The company, based in Denver, expects the second half of the year to be difficult for the industry, CEO Peter Swinburn told investors on a conference call. But he said the volume gains and other indicators are reasons for optimism. Drinkers have curbed trips to bars and cut back on purchases to save money.

But in Britain in June, they celebrated the World Cup and warmer weather by buying more beer. Volume in Britain rose 0.7 percent, a dramatic increase compared to the 11 percent volume drop in the first quarter. But the performance was below the 3 percent volume rise for the overall British beer industry.

“Things are certainly going in the right direction, albeit very slowly,” CEO Peter Swinburn said in an interview.

Molson Coors’ has resisted cutting prices in the recession. Instead the company is building up its brands by creating new products and tweaking existing ones to keep drinkers interested. It has also been raising prices, even if it sells less beer.

Swinburn said the company will be launching commercials for personal-sized kegs of its beers this month and releasing its Coors Light aluminum pint in September.

For the three months that ended in June, the maker of Coors Light and Carling on Tuesday posted net income of $237.8 million, or $1.27 per share. That’s up from $187.3 million, or $1.01 per share, in the same period last year.

Excluding one-time items, the company earned $234.5 million, or $1.25 per share.

Analysts, who typically exclude one-time items, expected $1.20 per share on revenue of $876.3 million, according to Thomson Reuters.

Shares rose 67 cents to $46.67 in late afternoon trading Tuesday.

Revenue rose 10.6 percent to $883.3 million. Canada’s sales volume rose 2.6 percent, while sales to retailers rose 2.2 percent, better than the industry’s decline of just under 2 percent.

In the U.S., sales to retailers for the company’s joint venture with SABMiller PLC fell 2.4 percent. The decline of MillerCoors’ volume eased from the first quarter, when the figure fell 4 percent.

The U.S. venture’s second-quarter net income rose 28 percent to $391.2 million, from $304.9 million last year. Without one-time items, the company earned $389.7 million.

UBS analyst Kaumil Gajrawala said that pricing and mix in the U.S. rose 2.8 percent, ahead of the 2.2 percent gain from the first quarter. He said it was telling that pricing was increasing even in the face of weak volumes.

“This data point provides further proof to our view that pricing would remain firm,” he told clients in a note, noting an expected price increase in September. Many brewers raise prices in the fall, after the prime summer drinking months are past.

Molson Coors, like other goods makers, is expanding worldwide to woo new drinkers, mainly through its Coors Light brand. International sales volume rose more than 24 percent, led by sales in China, Latin America and Europe.

The company is also working to save money, a major motivator for its MillerCoors pairing, which marked its second anniversary in July. In the quarter, the unit achieved $72 million in savings and other cuts, bringing total savings so far to $481 million since 2008.