Molson Coors Brewing Co. is pulling out the stops to kickstart sales of Coors Light, its flagship brand that has been losing market share in Canada.
The beer performed a little better in the second quarter but sales volumes still decreased by low single digits.
“The performance is still not satisfactory. It’s still losing its share of beer so there’s more work to be done,” Molson Coors Canada CEO Stewart Glendinning told analysts Wednesday during a conference call to discuss second-quarter results.
In addition to unveiling new advertising, the Montreal and Denver-based brewer is focusing on promotional offers this summer at retail stores to spur sales.
Molson Coors CEO Peter Swinburn said the beer has been partially cannibalized by the introduction of Coors Banquet, which was introduced to Quebec in July.
“If you put both of those brands together, the volume actually is growing sort of low single digits,” he added.
Molson Coors beat expectations as net earnings increased 9.5% to US$290.7 million in the second quarter on higher revenues.
The brewer, which reports in U.S. dollars, earned $292.7 million in underlying profit during the three months ended June 30, up from $271.3 million a year earlier.
That translated into $1.57 per share, 10 cents per share above last year’s results and analyst forecasts.
Revenues grew nearly 1% to $1.2 billion even though worldwide beer volume fell to 16.6 million hectolitres.
Molson Coors said the results were driven by improved performances in the U.S. and Europe, along with lower interest expenses.
In Canada, adjusted pre-tax income decreased 6.5% to $120.9 million, due to the loss of Mexican Modelo brands and a lower Canadian dollars that had a negative $6.3 million impact, partially offset by cost savings.
Sales were $516.5 million, down from $558.2 million last year, while sales volume decrease 2%.
Molson Coors said it is concerned by a 26% increase in Quebec’s excise tax Aug. 1 on retail beer sales, a second increase since the end of 2012. The change adds five cents to the price of a bottle of beer, but is offset by a seven-cent reduction in tax for beer sold in bars.
“We do expect that to be negative, but we’ll have to see what happens over the rest of the quarter,” Glendinning added.
Molson Coors underlying share of profits from the MillerCoors joint venture in the U.S. increased 10.3% to $190.3 million.
Mark Swartzberg of Stifel Nicolaus said the results are evidence of an improving margin outlook, especially in the U.S. and in Canada, where new cost reductions are being contemplated.
“We also expect increasing discipline around costs and margins with Mark Hunter becoming CEO. This has been a hallmark of his time as chief of the company’s businesses in Europe,” he wrote in a report.