Coors’ Sales Strong, Margins Soft

Analyst says margins weaker than expected.

Coors Brewing Company, the U.S. arm of Molson Coors Brewing Company, on Tuesday reported strong third quarter sales as all three lead brands posted healthy growth.

But observers have pointed out that margins were relatively soft.

Coors reported a 6.9 percent increase in sales to retailers during the quarter. That was driven by “mid-single-digit growth” by Coors Light, “strong double-digit growth by Blue Moon,” and “low-double-digit growth” by Keystone Light, according to a Molson Coors earning release.

Indeed, long-declining Coors Banquet actually posted its second consecutive quarter of growth.

Commenting on the sales, Beer Marketer’s Insights wrote: “Coors US sales very nearly firing on all cylinders in 3d qtr. … Can’t remember that strong a volume qtr for any big 3 brewer in a very, very long time.”

That said, Coors’ margins -- and, in Canada, Molson’s -- came in below the expectations of UBS analyst Kaumil Gajrawala:

"Both regions however, posted weaker margins; Canada and the US were 50bps and 30bps below our expectations, respectively."

Coors’ shipments to wholesalers increased by 3.4 percent. BMI said this was below its (BMI’s) estimate.

Wrote BMI: “So even tho Coors kept costs in check, up just 1.7% per bbl, its income before taxes (and special items) had modest 8.4% increase to $80.5 million.”

In the Molson Coors earning release detailing the results, Molson Coors CEO Leo Kiely said: “In our two largest markets, the U.S. and Canada, we continued to gain market share on the strength of our strategic brands.”

At 11:58 a.m. eastern time, Molson Coors shares were down 2.10 percent, or $1.19, to $55.35.

The Molson Coors release can be seen here.

The BMI home page is here.