Molson Coors says weak economy affecting beer sales in oil-producing provinces
Molson Coors Brewing Co. says a sluggish economy and higher food prices are affecting beer drinking in Canada's oil-rich provinces.
The Denver and Montreal-based company said the beer industry has seen customers, particularly in Alberta, shift from higher-priced premium to economy brands.
Overall sales volumes have also been slipping in Alberta, as well as in the oil-producing provinces of Newfoundland and Labrador and Saskatchewan.
Molson said its sales volume decreased 5.4 per cent across Canada in the fourth quarter. In January, sales to retailers for at-home consumption fell by more than 10 per cent, or by almost nine per cent excluding the impact of the termination of an agreement to distribute Miller brands.
Part of that decrease can be attributed to macro-economic factors, including higher food prices, said Stewart Glendinning, chief executive of Molson Coors Canada.
"The consumer is under pressure," he said Thursday during a conference call on the company's fourth-quarter and 2015 results.
"And if you add to that the fact that consumer debt in Canada is at an all-time high, it's made for quite a difficult recipe in some of those provinces."
Sales volumes for Coors Light were also reduced in Quebec by the brewer's decision to raise prices for its flagship brand.
Molson Coors (TSX:TPX.B, NYSE:TAP) said its net income plummeted 65 per cent to US$32.8 million in the fourth quarter because of lower sales, currency fluctuations and reduced income from operations in Canada and the United States.
The company, which reports in U.S. dollars, said its underlying profit in the quarter, excluding one-time items, was $90.6 million or 49 cents per share, down 11.3 per cent from $102.1 million or 55 cents per share a year earlier.
Net sales for the period ended Dec. 31 were $844.4 million, compared were $973.8 million a year earlier — a decrease of 13.3 per cent, or 3.5 per cent excluding currency fluctuations.
In Canada, adjusted pre-tax profits from continuing operations fell 32 per cent to $51.8 million on $341.9 million in net sales. That compared with $76.2 million on US$423.1 million in net sales for the same period a year earlier.
The drop in profits was partially due to a US$6.9-million currency hit from the lower Canadian dollar. Excluding currency, profits decreased 23 per cent.
For the full year, the company's (TSX:TPX.B, NYSE:TAP) net profits decreased to US$359.5 million from $514 million in 2014. Underlying profits were $700.4 million or $3.76 per share, down from $768.5 million or $4.13 per share a year earlier. Revenues decreased 14 per cent to US$3.57 billion.