Molson Coors third quarter profit underwhelm
How can they drink beer if they are without jobs? The jobless rate in Britain in October 2011 jumped to 8.1 percent, its highest level in 17 years, and young people, the core customer group for beermakers, are being hit hardest. Experts are talking openly of a “lost generation” without hope of finding a job.
This, combined with the UK economy on the brink of another recession, also affected the UK's number two brewer Molson Coors, contributing to a 23 percent drop in third-quarter profit from a year ago.
The company, which operates mainly in Canada, the U.S. and the UK, had to face up to its fourth-consecutive profit miss, which sent shares down more than 3 percent on 2 November 2011, which it released in its third quarter 2011 financials.
That's bad news for investors but the drop in share price could have been worse. Many other stocks that didn't meet analysts' expectations have fallen much more.
Releasing its July to September financials, the maker of Coors Light, Molson Canadian and Blue Moon beers said net income fell to USD 197.4 million from USD 256.1 million a year earlier.
Net sales rose to USD 954.4 million from USD 875.0 million.
Worldwide beer volume slid 0.8 percent to 13.1 million hl.
"We continued to face high unemployment among core beer consumers, lower volume and significant commodity inflation," Molson Coors Chief Executive Officer Peter Swinburn said.
Molson Coors' sales to pubs, where half of all beer is consumed, fell 3 percent in the quarter as restaurants, pubs, hotels and other establishments saw less traffic. Pre-tax income in the region fell by 25 percent to USD 27.4 million, it was reported.
The British Beer and Pub Association’s quarterly beer barometer shows that pub beer sales have remained disappointing, falling by 4.3 percent from July to September– equivalent to 45 million fewer pints sold over the quarter compared with last year, or 488,000 fewer per day. While the rate of decline is slowing, it has not bottomed out, the association said.
Molson Coors' sales were also weak in the United States, where the labour market is experiencing a sluggish recovery. MillerCoors, the joint venture between SABMiller and Molson Coors, reported a 14 percent drop in third quarter profit as sales fell 2.5 percent.
Despite these challenges, Molson Coors will continue to focus on its growth strategies of maximising profitable growth opportunities in its core markets, expanding into new and emerging markets, and looking for M&A opportunities to generate shareholder value.
Hear, hear.
