Financial bonanza

MONTREAL–Molson Coors Brewing Co. has carried momentum from last year’s growth in strategic brands into its first-quarter earnings, increasing sales by more than 10 per cent.

The American-Canadian beer company, reporting in U.S. dollars, had sales of $1.36 billion (U.S.)in the first quarter as volume grew 2.8 per cent to 10.7 million hectolitres.

"First quarter 2008 was a very strong quarter for our company as we continued to achieve top-line and bottom-line performance," chief executive Leo Kiely told analysts yesterday.

Molson Coors earned $37.1 million, or 20 cents per share, in the 13 weeks ended March 30, up from a year-ago net profit of $4.4 million, or three cents per share, on sales of $1.23 billion.

Kiely attributed growth in net sales to brand strength, positive pricing and favourable currency exchange rates.

"Coors defies gravity again," Harry Schuhmacher, publisher of industry newsletter Beer Business Daily, said in an email to his readers yesterday.

Molson Coors, the third-largest U.S. beer maker, plans to merge its U.S. operations with those of London-based SABMiller, the second-biggest U.S. brewer, in the middle of this year.

Income from continuing operations was up 140 per cent to $46.1 million thanks to "strong business performance in the U.S. and Canada and a lower effective tax rate, partially offset by accelerated incentive compensation expense and one-time debt extinguishment costs," the company stated.

Adjusted earnings were 32 cents per share, beating the Thomson Financial analysts’ consensus forecast by four cents.

Underlying pre-tax income from Canada accounted for $64.1 million in the first quarter, almost 42 per cent higher than figures from the same period last year.

"It was driven by positive net pricing and a $9 million benefit from favourable foreign exchange," said the company’s chief financial officer, Timothy Wolf.

Canadian sales to retail increased 2.5 per cent, driven by continued double-digit percentage growth from brands Coors Light, Creemore and Carling.

"To keep our brand momentum going this year in Canada, we’re building momentum on our strategic brands by rolling out innovative new packages, promotions and advertising," Kiely said.

Underlying U.S cash advance loans. pre-tax income increased 36 per cent to $61.9 million, "driven by strong sales volume growth, higher net pricing and continued savings from cost initiatives."

The British business lost $2 million, but Kiely noted the U.K.’s brewing industry is beset by difficult market conditions. He said the division nevertheless managed to grow overall market share and net pricing.

On the Toronto Stock Exchange yesterday, Molson Coors shares gained $3.36 (Canadian), or 6.23 per cent, to close at $57.30.

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