NEW YORK – North American brewers Adolph Coors Cos. (RKY) and Molson Inc. (search) , which have agreed to merge, reported lower-than-expected quarterly profits on Thursday on weak sales in their home markets.
Golden, Colo.-based Coors said rising prices on its brands helped offset the volume decline but Canada's Molson was also hit by an impairment charge on its Brazilian unit.
The merger deal, which the two companies agreed to in July, would form the world's fifth-largest brewer in a bid to compete against larger rivals.
Industry giants such as Anheuser-Busch Cos. Inc. (BUD) and SABMiller Plc have been fighting the declining volume trend in developed markets by buying up smaller competitors around the globe.
Coors reported third-quarter profit of $64.1 million, or $1.68 a share. This compares with a profit of $61.4 million, or $1.68 a share, last year, when the company had fewer shares outstanding.
Reuters Estimates listed the average analyst forecast as $1.75 per share.
Sales rose 5.3 percent to $1.10 billion but volume, which was hurt by cold and wet weather, fell 2.4 percent to 8.6 million barrels.
Coors' quarterly profit was boosted by a lower tax rate of 30.2 percent, said Smith Barney analyst Bonnie Herzog, who has a rating of sell on the company's stock.
"We expect Coors will continue to struggle with volume growth due to its lack of innovation and its dependence on one core brand, Coors Light," Herzog said in a research note.
Montreal-based Molson, said it lost C$117.9 million ($96.6 million), or 92 Canadian cents a share, in the quarter ended Sept. 30, compared to earnings of C$96.5 million, or 76 Canadian cents a share, in the same period last year.
Excluding the C$210 million impairment charge in Brazil and merger related costs, Molson said it earned C$63.3 million, or 50 Canadian cents per share.
Analysts had expected, on average, earnings of 52 Canadian cents per share, according to Reuters Estimates.
Molson, which warned of weaker-than-expected results in September, said revenue slumped to C$674.4 million from C$715.6 million as sales declined in both Canada and Brazil.