World: Molson Coors’ Q1 net sales fall by 8.7%

Molson Coors Beverage Co. CEO Gavin Hattersley described the beverage manufacturer's first quarter as a period unlike any other in history. Faced with the negative impacts of the Covid-19 pandemic, Molson Coors reported an 8.7% decline in net sales, the Milwaukee Business Journal reported on April 30.

Some of the company's North American sales declines were a result of brewery downtime associated with the Milwaukee workplace shooting in late February, the company reported.

“Despite the early progress, our first quarter results were disproportionately affected by the coronavirus, a pandemic that has changed the world - not just for our business, and our industry, but for the entire global economy," Hattersley said in a press release.

"Like everyone else, the full impact and what our new normal looks like going forward is still uncertain, but coronavirus has had, and will have, a material impact on our business. We will continue to navigate this challenging time by first protecting our employees and mitigating the short-term risks, and second ensuring that we position the business to compete and win in the long-term.”

Molson Coors reported net sales for the first quarter of $2.1 billion, compared with $2.3 billion in the first quarter of fiscal 2019. The company reported a net loss of $117 million, or 54 cents per share, compared with net income of $151.4 million, or 70 cents per share, in the first quarter of 2019. Adjusted earnings per share was 35 cents per share.

The company reported a decline in worldwide brand volume and financial volume impacted the sales revenue declines. European declines were driven by the Covid-19 pandemic. Molson Coors also reported that the company's financial volume was negatively impact by unfavorable shipment timing in the United States. This included the brewery downtime associated with the Milwaukee tragedy in late February that left six brewery workers dead.

North American net sales declined 7.4%. European net sales dropped 15.5%.

"We are actively monitoring the impact of the novel coronavirus pandemic, which has changed the landscape of our business. We currently expect a significant adverse impact, particularly in the second quarter of 2020, to both net sales and profit performance for fiscal year 2020," Molson Coors said in a press release.

On March 27, Molson Coors withdrew in its entirety the company's financial outlook for 2020.

The company estimated in its first quarter earnings results that 23% of its 2019 consolidated net sales resulted from on-premise consumption such as bars and restaurants. This includes 17% of North American net sales and 50% to 55% of European net sales.

In nearly all of the company's markets, on-premise business has been reduced to basically zero, the company said.

Molson Coors reported that off-premise sales continue to perform well, but the company does not expect those sales to offset the loss of on-premise volumes.

In the first four weeks of April in North America, Molson Coors estimated sales-to-retail was down in the U.S. approximately 14%. This was driven by lower premium and above premium brand trends. Economy brand performance declined approximately 4% in that same time frame.

"We expect the negative on-premise trends in the U.S. to continue while social isolation continues to be practiced and expect that any increase in total off-premise volumes due to channel shifting will not be sufficient to offset the losses experienced in the on-premise," the company reported.

In Europe, Molson Coors estimated brand volumes were down approximately 40% in the first four weeks of April.

Molson Coors' first-quarter results included aggregate charges of $50 million, which were a result of the company's voluntary temporary keg relief programs to support on-site customers. These programs allowed for customer reimbursements of untapped kegs and resulted in a reduction of net sales of $31.5 million for these returns and reimbursements.

Along with Molson Coors' previous Covid-19 actions, which include reducing capital expenditures by about $200 million, furloughing hospitality employees, providing increased health and safety measures and expanding manufacturing workers pay incentives, the company said the board is evaluating other actions which may include a suspension, reduction or temporary elimination of its dividend.

"This is a very fluid situation, as governments and companies evaluate the impacts of the pandemic and prepare for the re-opening of the economy. We will continue to take prudent and proactive actions which are in the best interests of the Company, our employees, consumers, customers and our stockholders as things become clearer in this rapidly evolving situation," Molson Coors reported.

The company also reported it is adapting ways of distributing its products including accelerating its e-commerce platforms and working with alcohol delivery platforms.

30 April, 2020