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Molson Coors Jumps On Earnings Beat As Beer Volumes Rise

Molson Coors Jumps On Earnings Beat As Beer Volumes Rise
By: Martin Blanc
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Molson Coors Brewing Company (TAP) reported earnings results for the second quarter of its fiscal 2014 (2QFY14) just before markets opened. For the quarter ended June 30, the North American brewing company reported adjusted earnings per share (EPS) of $1.57, up 7% year-over-year (YoY) and analysts’ estimates of $1.47.

Total revenues for the quarter came in at $1.19 billion, up 0.5% YoY on a constant currency basis, beating analysts’ estimates of $1.18. The company was able to report improved earnings and revenues on the back of strong performance by its MillerCoors joint venture in US, a strong show in the European segment, and lower interest expenses.

Worldwide beer volumes decreased 0.9% during the quarter, with net sales increasing by the same amount due to a better pricing mix. The company said it was able to successfully wade through the aftermath of flooding in Central Europe and the loss of Modelo brands in Canada.

The company’s equity income from MillerCoors increased 10.3% to $190.3 million in the quarter. MillerCoors is a joint venture between UK-based SABMiller plc (SBMRY) and Denver, Colorado-based Molson Coors. Net income for the joint venture rose 8% to $445.7 million on the back of positive pricing, a favorable sales mix, and cost saving measures. The gains were offset by weaker numbers for MillerCoors’ domestic sales-to-retailer (STR) and domestic sales to wholesalers (STW), which fell 1.2% and 1.7% respectively. The company’s net revenue per hectoliter increased 3.1% while contract brewing volumes went up by 6.4%.

Molson Coors’ European segment saw pretax income rise 6.9% on a constant currency basis due to cost saving measures and a better geographical mix. Strong sales volume growth in UK, Hungary, and Czech Republic help offset lower volumes in Romania and Croatia. The International business segment saw sales volume grow 21.6% on the back of strong Coors Light growth in Mexico and Latin America.

The world’s seventh-largest brewer has now beaten EPS estimates six times in the last eight quarters and beaten revenue estimates three times in the last eight quarters. Analysts estimate full-year EPS to clock in at $4.3 and full-year revenues to come in at $4.28 billion. The stock has six Buy calls along with six Hold calls and one Sell call. The consensus twelve-month target price of the stock is $78.7, representing an upside potential of 17%.

Molson Coors shares were up 6.3% today around mid-day trading. The stock is up 28% year-to-date.

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