Miller Earnings Fall

Commodity costs, Miller Lite decline bite into fiscal year results.

Miller Brewing Company suffered a double digit decline in earnings during the fiscal year ended March 31 due to higher commodity costs, particularly aluminum.

Miller posted earnings before interest, taxes and amortization of $375 million, 17 percent below the prior year, SABMiller plc disclosed in an earnings release Thursday

Commodity cost pressures squeezed the EBITA margin to 7.7 percent from 9.3 percent.

Revenue slipped by 1 percent to $4.9 billion.

Other factors hurting earnings included weakening Miller Lite performance and price competition in the economy segment.

Miller's sales to retailers were flat from the year-earlier period. Backing out the contribution of the Sparks and Steel Reserve brands, which were acquired in August, STRs slipped by 3 percent.

Shipments to distributors were in line with STRs.

Miller Lite sales slipped by 1 percent in face of expanded competition in the light segment. The year saw import and craft beer marketers step up their focus on the light segment, notably with Heineken USA's launch of Heineken Premium Light.

Miller Genuine Draft experienced a sales decline broadly in line with that of the domestic full-calorie segment.

Economy brands suffered in face of increased price competition. However, Miller High Life showed positive trends in core markets later in the year after a new ad campaign was launched.

There were some positive developments. Miller did increase sales of its worthmore brands (including Leinenkugel's, Peroni Nastro Azzurro, Pilsner Urquell and Sparks); deliver domestic revenue increases; and invest in core brands and the organization to position it for sustainable growth. Improved brewery efficiencies partially offset rising commodity costs.

Going into the new fiscal year, Miller is pressing its simple three-point strategy for its brand portfolio. Stoking the growth of Miller Lite. Exploiting growth segments of the beer business with its worthmore brands, including a national launch of Miller Chill, and migrating its portfolio to higher-margin brews. And protecting, and maximizing the profitability, of core brands.

The release can be seen here.