Canada: Molson Inc., which plans to combine with Adolph Coors Co. to create the world's fifth-biggest brewer, announced on October 28, 2004 fiscal 2005 second quarter results for the three-month period ended September 30, 2004. The brewery said the results in the quarter were principally affected by the Corporation recording a C$210 million (C$168 million after minority interest) impairment charge related to operations in Brazil.

The Corporation recorded a consolidated operating loss of C$104.0 million for the three months ended September 30, 2004, as a result of non-recurring charges that totalled C$229.4 million including the impairment charge for Brazil and Molson Coors merger costs. These charges excluded, the Corporation recorded a quarterly operating profit of C$125.4 million.

Similarly, the consolidated net loss for the quarter was C$117.9 million, down from net earnings of $96.5 million for the same period last year, and net loss per share was C$0.92 versus net earnings per share of $0.76 in the previous year. Excluding the second quarter non-recurring items, net earnings were C$63.3 million, and net earnings per share totalled C$0.50 per share.

"The second quarter performance was disappointing but not unexpected. It was heavily impacted by the impairment charge attributable to the Brazilian operations. In Canada, Molson faced an ongoing challenging competitive environment in Ontario and Alberta where the discount segment continued to expand supported by regional brewers and beer companies that benefit from preferential tax rates," explained Daniel J. O'Neill, President and CEO of Molson.

For the quarter ended September 30, 2004, net sales revenue decreased to C$674.4 million compared to $715.6 million for the same period last year stemming from sales declines in both Canada and Brazil. Consolidated brewing volume decreased by 8.4% to 5.13 million hectolitres with volume down by 6.8% and 9.6% in Canada and Brazil, respectively. Net interest expense for the quarter was C$22.6 million, C$0.3 million lower than the prior year, owing to an overall decrease in average debt and related interest expense in Canada for the three-month period. The interest expense decrease was partially offset by higher net debt and interest bearing liabilities in Brazil.

Cash provided from operating activities remained relatively strong and totalled C$155.4 million. However, it was 33.8% lower than the corresponding quarter last year owing to lower net earnings, and increased pension funding offset by lower working capital.

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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