USA: Molson Coors Brewing reports a 10% share growth in Q4 2006

Molson Coors Brewing Co. reports earnings for the fiscal fourth quarter, The Associated Press reported February 13. The following is a summary of key developments and analyst opinion related to the period.

Molson Coors Brewing Co., like competitors Anheuser-Busch Cos. and SABMiller PLC, has been facing cost increases for commodities such as aluminium and barley throughout the year.

Molson Coors, which makes beers including Coors Light, Blue Moon Belgian White Ale and Keystone, is hoping to see some benefits from cost-cutting initiatives, including $6 million to $7 million of savings from the closing of a Memphis, Tenn., brewery.

The company started the quarter with an analyst downgrade in October on the company's declining volumes in Canada. Bear Stearns analyst Carlos Laboy warned that volume declines could continue past the end of 2006 into 2007.

The company got a bit of a boost in November when the Securities and Exchange Commission recommended closing an investigation into the merger that formed the company.

Molson Coors Brewing was formed in 2005 by the merger of Canada-based Molson Inc. and Golden, Colo.-based Adolph Coors Co. The merger prompted an investigation after several lawsuits alleged the company and some of its officers and directors misled shareholders by not disclosing first-quarter business trends before shareholders voted on the deal.

Analysts polled by Thomson Financial expect earnings of 94 cents per share on sales of $1.42 billion. Morgan Stanley analyst William Pecoriello wrote in a note to investors that share prices are up 15 percent since the beginning of December and the company had a good start to 2007 in the U.S. – both of which should be a "catalyst for further share price appreciation."

Pecoriello said December consumer sales may have been better than previously expected in the U.S., partly because of warmer weather. Canadian sales may also have been helped by warm weather in the fourth quarter, he said.

Laboy, meanwhile, said that although Molson Coors' brands are in "solid shape," he added that Molson Canada has lost its status as a Canadian market leader after competitor Labatt announced it bought Lakeport Brewing. Laboy called Lakeport "a market sponge in Ontario for the past decade." "Molson has no place to hide from Labatt's aggressive push and any weakness in the Canadian dollar - as has been seen so far in first quarter - would compound any volume troubles," he warned.

Shares climbed 10 percent in the quarter and 29 percent during the past year.

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