Canada: Molson Inc. announced on July 22, 2004 first quarter fiscal 2005 results for the three-month period ending June 30, 2004. Molson recorded consolidated operating profit (EBIT) of $126.7 million, 13.2% higher than the previous year first quarter. With the rationalization charge incurred in the first quarter of last year excluded, the current year's first quarter operating profit was down 14.5% compared to last year. In Canada, higher selling prices and favourable net sales revenue mix contributed to a 1.6% improvement in operating profit, notwithstanding the negative impact of such items as higher pension expenses, adverse product cost mix, increased marketing and sales investment as well as a labour disruption in the British Columbia distribution network. Brazil's operating profit was negatively impacted by higher investment, in both marketing and the sales centre costs, as well as lower volumes and adverse mix.

"New management was put in place in both Canada and Brazil as part of the "regaining the momentum" strategy outlined in the annual report. Although still early, we have seen encouraging signs with new advertising, new packaging, new promotional design, which have resulted in consecutive weekly share gains over the last several weeks. Fernando Tigre is taking charge of Brazil, questioning every single decision and is in the process of developing a revised going forward plan," explained Daniel J. O'Neill, President and CEO.

Net earnings for the three months ended June 30, 2004 were $68.3 million, an increase of 24.9% over the $54.7 million earned for the corresponding period in 2003. Net earnings per share increased 25.6% to $0.54 per share compared to $0.43 per share for the same period last year. The prior year's earnings included a charge for a plant closure in Brazil, in the amount of $43.3 million (R$92.2 million), as well as a pre-tax gain of $7.0 million from the sale of a property in Barrie which was recorded against the provision for rationalization line in the statement of earnings.

Net earnings for the period were $68.3 million or a 19.3% decrease from $84.6 million for the same period last year, excluding the charge for rationalization costs and the gain on sale in the prior year's quarter. Net earnings per share decreased 19.4% to $0.54 per share on the same basis. This decrease primarily reflects the lower operating profit as well as no tax recovery being recorded on the Brazil losses.

For the first quarter ended June 30, 2004, net sales revenue increased 2.0% to $675.0 million compared to $661.8 million for the same period last year. The improvement factors in a 3.2% revenue increase in Molson's operations in Canada, which was partially offset by lower volumes in Brazil. Consolidated brewing volume for the quarter totalled 4.99 million hectolitres, down 3.4% from 5.17 million hectolitres for the previous year, with volume down by 2.8% and 4.2% in Canada and Brazil, respectively. In addition, the impact of declining foreign exchange rates (Brazilian real and the US dollar) relative to the Canadian dollar had a negative impact on the consolidated net sales revenue figure when measured in Canadian dollars.

Cash flow from operations before working capital and rationalization costs increased 2.7% to $72.2 million. Consolidated net sales revenue up 2.0% to $675.0 million, net sales revenue in Canada up 3.2%.

Total Molson beer volume was down 3.4% for the mentioned period, volume in Canada down 2.8% and volume in Brazil down 4.2%. Core brand market share in Canada up 0.9 share points, total market share in Canada down 1.2 share points.

Molson's core brand share continued to perform well registering a share increase of 0.9 share points on a national basis, while average market share for all beer sold in Canada declined 1.2 share points to 42.8% from 44.0% compared to the same period last year. Continued competitive pressure from the value segment in both Ontario and Alberta and the effect of the distribution strike in British Columbia contributed to this decline.

Molson Inc. is one of the world's largest brewers of quality beer with operations in Canada, Brazil and the United States. A global brewer with $3.5 billion in gross annual sales, Molson traces its roots back to 1786 making it North America's oldest beer brand. Committed to brewing excellence, Molson combines the finest natural ingredients with the highest standards of quality to produce an award-winning portfolio of beers including Molson Canadian, Molson Export, Molson Dry, Rickard's, Marca Bavaria, Kaiser and Bavaria.

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