DOW JONES NEWSWIRES
MillerCoors LLC. posted a 75% surge in second-quarter profit on
prior-year charges, while the company noted soft sales of premium
brands helped drive down profit margins.
Miller Lite's woes also continued in the latest quarter, as
sales to retailers fell by mid-single digits on a percentage basis.
An ad campaign was launched by the company in the spring to
revitalize the brand.
The joint venture has finished its first year of operations, and
core earnings grew by a double-digit percentage each quarter, noted
Chief Executive Leo Kiely. The operations are made up of the U.S.
businesses of Molson Coors Brewing Co. (TAP) and SABMiller PLC
(SAB.JO).
Sales of major U.S. beer brands are struggling as some
recession-weary consumers drink less or switch to cheaper brews.
MillerCoors recently began testing the sale of $20 draft-beer
systems for consumers to drink at home, part of a string of new
products and package innovation from major players grappling for
market share in a crowded, slow-growing industry.
MillerCoors' profit rose to $304.9 million from $174.6 million a
year earlier. The prior-year figure assumes the joint venture was
already in effect. Excluding items such as integration costs,
earnings rose 16% to $325.3 million.
Net sales rose 1.6% to $2.14 billion despite a 1.7% volume drop.
But higher costs from production more that offset price hikes and
helped push gross margin down to 39.1% from 40.1%. Overhead
expenses, though, fell 11%.
Meanwhile, Miller said it achieved $60 million in cost savings,
pushing its year-to-date total to $110 million. The company said it
now expects to save $260 million by the end of this year, beating
its original goal of $225 million. In May, MillerCoors said it
expected to achieve cost savings faster than planned. Nevertheless,
it again reaffirmed its three-year $500 million target for savings
from the venture.
Domestic sales to retailers fell 0.8%, reflecting Miller Lite
and softness in the company's premium brands. Domestic sales to
wholesalers dropped 1.1%.
Molson Coors will release its second-quarter results later
Monday morning.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com;