DENVER – Molson Coors Brewing Co. (TAP) said Tuesday that earnings declined sharply in the second quarter due to hefty charges, and announced plans to restate first-quarter income to correct its accounting for a tax asset. Its shares tumbled nearly 5 percent.
The brewer behind Molson Canadian (search), Coors Light (search), Carling and Keystone beers said its earnings fell to $38.5 million, or 45 cents per share, for the three months ended June 26 from $72 million, or $1.90 per share, a year ago.
Excluding charges of $87.7 million, the company would have earned $105.1 million, or $1.22 per share, in the latest period.
Analysts surveyed by Thomson Financial were looking for profit of $1.61 per share.
Net sales, which exclude excise taxes, grew to $1.61 billion from $1.15 billion last year. Total sales including excise taxes rose to $2.2 billion from $1.55 billion last year, primarily driven by the inclusion of Molson Inc. results. Molson combined with Adolph Coors Co. (RKY) earlier this year.
Molson Coors shares fell $3.12 to $60.70 on the New York Stock Exchange (search).
Leo Kiely, Molson Coors president and CEO, said, "Overall, our second-quarter results were mixed, with some trend improvements in our two largest markets — Canada and the U.S. — and continuing challenges in both our Europe and Brazil segments. In Canada, our year-over-year sales to retail increased 2.1 percent during the second quarter, which was our best retail sales performance in the last seven quarters in Canada, with Coors Light growing more than 10 percent from a year ago. In the U.S., Coors Light sales to retail were up slightly compared to a year ago."
The company also said the U.S. pricing environment remained favorable, despite competitive discounting activity in some key markets on select brands and packages. In its Europe segment, Molson Coors said it was "significantly challenged" by a weak British beer industry, increased competitive discounting and margin pressure from unfavorable brand and channel mix changes.
In Brazil, the company said cost and pricing trends have improved, but continued sales declines and operating losses challenged this business.
Molson Coors plans to file an amended first-quarter 10-Q later this week to correct the initial recording of a U.S. deferred tax asset as part of the purchase accounting for its British acquisition in 2002. Due to the change, the company will restate its first-quarter 2005 tax provision and earnings.