Big thanks to Kid Dynamite for spotting one of the true mainstream economic indicators out there: beer sales.
A report issued by Molson Coors Brewing Co. says that the company sold 3.8% less beer worldwide in Q1 of 2010. While profits climbed 38% thanks to a special tax gain, the company sold less beer to consumers and costs of brewing shot up as commodities continue to rise in price to pre-Lehman levels.
One thing that doesn’t make sense however is that Molson Coors blames the decline in beer sales on “high unemployment and a slow recovery in consumer confidence.”
Yeah, right. Unemployed people get tons of free money for the government that they can spend on cheap beer. That and they have plenty of time to drink it around the clock when they’re not looking for work.
Below, the press release in full:
DENVER — Molson Coors Brewing Co.’s first-quarter profit climbed 38 per cent on a tax-related gain, but higher costs and fewer beer purchases by consumers caused adjusted results to miss Wall Street’s expectations.
Molson Coors said Tuesday that it sold 3.8 per cent less beer worldwide. It blamed the decline on high unemployment and a slow recovery in consumer confidence.
Consumers have gone out to bars and restaurants less frequently during the economic downturn in an attempt to save money, pressuring the sales of drinks makers. Several brewers have also raised prices.
Molson Coors earned $104.6 million, or 56 cents per share, for the three months ended March 27. That’s up from $75.7 million, or 41 cents per share, during the same period a year earlier.
But the brewer’s profit was 37 cents per share when removing costs related to the settlement of Brazilian indemnity liabilities. That missed the 45 cents-per-share estimate of analysts polled by Thomson Reuters. These estimates normally exclude one-time items.
Molson Coors also struggled with rising costs, with marketing, general and administrative expenses increasing to $237.5 million from $182.6 million. Cost of goods sold rose to $404.4 million from $346.1 million.
Revenue climbed 15 per cent to $947 million from $824.2 million. Taking out excise taxes, revenue rose to $661 million from $559 million.
Wall Street expected $636.7 million.
In Canada, sales to retailers increased 5 per cent, helped by a mid single-digit rise in Coors Light and Molson Canadian, coupled with increases in Molson Dry and Rickard’s. Canadian sales volume rose 3.3 per cent.
In the U.K., brands Molson Coors owns saw volume fell 10.9 per cent, but revenue from owned products increased 21 per cent in local currency because of higher prices.
Molson Coors, which is based in Denver, has been holding firm on some pricing despite soft economic conditions. This is true in Britain, where the company is looking to make more money on what it does sell.
Earlier in the day MillerCoors, a joint venture made up of the U.S. businesses of Molson Coors Brewing Co. and SABMiller PLC, reported its first-quarter profit rose slightly on cost-cutting and higher prices even as sales of some brands slipped. The company makes Miller Genuine Draft and Blue Moon and other beverages.