E-Malt.com News article: 2111

Molson Inc., Canada's oldest brewer, posted a lower third-quarter profit on January 28, sapped by weaker sales in Brazil and at home, its two largest markets. During the third quarter of fiscal 2004 Molson recorded $115.3 million in operating profit (EBIT), down 7.2% over the same quarter in fiscal 2003. For the nine-month period ended December 31, 2003, Molson operating profit totalled $392.2 million which included a first quarter rationalization charge of $43.3 million and a $7.0 million gain on sale.

"We simply did not deliver the planned volume in the two largest markets Canada and Brazil," summarized Daniel J. O'Neill, President and CEO of Molson Inc. "In Canada, where the overall business remains healthy, two areas affected top line growth: softer quarterly industry volume in Québec, as well as market share declines in the Ontario/West region reflecting ongoing low price competition and the elimination of in-case activity. In Brazil, major delays in setting up a sales force in Sao Paulo severely impacted volume and negated Kaiser's planned contributions to operating profit."

He added, "A full business review has been completed and plans are now in place to drive continued performance in Canada and all Molson divisions are committed to deliver."

Net sales revenue was 2.8% lower during the past quarter, totalling $623.3 million compared to $641.3 million for the same period last year. The major contributing factor was the low volume level in Brazil, which was partially offset by higher prices. Volumes were down 23.4% in Brazil, 2.0% in the United States and 1.2% in Canada, leading to an overall 14.7% volume drop. Molson third quarter volume totalled 5.82 million hectolitres versus 6.82 million hectolitres in the previous year.

Net earnings for the current fiscal third quarter totalled $43.6 million, compared to $66.1 million in the previous year. A significant part of the 34.0% negative variance stemmed from a $16.0 million non-cash increase in income tax expense resulting from the repeal of previously enacted future income tax rate reductions in Ontario. Excluding the $16.0 million non-cash tax expense, net earnings were $59.6 million. Net earnings per share excluding this non- cash tax expense totalled $0.47 per share compared to $0.52 per share for the corresponding period in fiscal 2003.

Cash flow from operations before working capital and rationalization costs for the three-month period was $84.8 million, 20.8% less than the same period last year due primarily to the decrease in net earnings.

In Canada, net sales revenue for the third quarter totalled $482.0 million, slipping slightly from the $483.0 million recorded in the corresponding period of fiscal 2003. Modest consumer price increases counterbalanced to a degree the lower volumes and adverse mix - higher level of value brand sales - and contributed to a 5.9% increase in operating profit (EBIT), from $109.5 million to $116.0 million. While industry volume in Canada was relatively flat, Molson volume dipped 1.2%, reflecting declines in Alberta and Québec and leading to an overall 0.5 share points decline to 43.4%.


30 January, 2004