UK volumes dip at Molson Coors

Molson Coors has reported a 10.9% drop in first quarter beer volumes in the United Kingdom as a result of its decision to protect its margins.

The Carling, Coors and Cobra brewer said volume, against a market down 5%, had also been impacted as it worked on concluding contract negotiations with some of its major customers, especially in the off-trade, and the poor weather at the start of the year.

The brewer's decision to forego low-margin volume and increase prices helped increase net sales per hectolitre by 21% in the UK.

Pre-tax income fell $1.4m to $2.1m due to a $7.1m non-cash increase in defined-benefit pension expense.

"Excluding the first quarter increase in pension expense, the UK underlying pretax income would have more than doubled, driven by positive benefits of continuing to leverage the Company's contract brewing arrangements, brand-building efforts, and strong pricing," it said.

Excluding the pension expense, costs of goods sold per hectolitre increased 18% — 1% due to raw material rises, 7% due to brand mix and higher employee-related costs, 7% due to to fixed-cost deleverage of lower own brand volumes and 3% due to other factors.

"In the UK, the strength of our brands continued to boost margins, as they have over the past two years," said Peter Swinburn, Molson Coors president and chief executive officer.

"Having achieved this, we now expect to drive more stable UK market share as the year progresses. Overall, our core business remains strong and well-positioned to take advantage of growth oportunities as the economy recovers."

Overall, volumes declined 3.8% and underlying pre-tax profit fell 19% on last year to $87.1m.