Molson Coors Beverage Company
CEO : Mr. Gavin D. K. Hattersley
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 0.4% YoY | 111.0% | -837.8% | 2023-02-21 |
Tracey Joubert says,
Net Sales Revenue and Underlying Pretax Income
- Net sales revenue grew 7% on a constant currency basis in Q4 2022, exceeding guidance
- Underlying pretax income grew 7.6% on a constant currency basis in Q4 2022, delivering guidance
- Record underlying pretax income levels achieved in Q4 2022 with growth of 51.1%
Fourth Quarter Performance Drivers
- 11.4% net sales per hectoliter growth achieved through strong global net pricing and positive sales mix
- Financial volumes declined 6.9%, driven by lower brand volumes in the Americas and cycling a significant prior year distributor inventory build in the US
- Second and third-quarter financial volumes declined in Quebec due to the labor strike
Costs
- Inflationary pressures were a headwind, driving underlying COGS per hectoliter up 11.5%
- The biggest cost driver was inflation, contributing over 60% of the cost increase
- Cost savings program delivered over $600 million in targeted savings from 2020 to 2022
Business Unit Performance
- In the Americas, net sales revenue was up by 0.4%, while underlying pretax income grew 29.8%
- In EMEA and APAC, net sales revenue increased by 20.3%, and underlying pretax income increased 515% or over $23 million
- Net sales per hectoliter were up 9.3% for the full year driven by strong global net pricing and positive sales mix across both business units
Outlook
- Anticipate low-single-digit growth for both net sales revenue and underlying pretax income in 2023, despite softness in the beer industry and continued global inflationary cost pressures
- Expect underlying free cash flow of $1 billion, plus or minus 10%
- Expect inflation to continue to be a headwind, but expect to grow gross margin per hectoliter in both business units with ongoing cost savings efforts, pricing, and continued premiumization
- Plan to increase marketing dollar investments in 2023 versus the prior year
Gavin Hattersley says,
Positives
- Molson Coors has delivered on its Revitalization Plan, achieving 7% top-line and 8% bottom-line growth and bringing leverage ratio under 3 times.
- The strength of the core brands like Coors Light and Miller Lite, which have shown growth in both U.S. volume and dollar share in Q4, has contributed to the company’s growth.
- Molson Coors has aggressively premiumized its portfolio, with over 28% of global net sales revenue coming from above-premium portfolio, which has gained the second most dollar share among major U.S. brewers in 2022.
- The company has expanded beyond beer, laying solid foundations in energy drinks and full-strength spirits, which are new spaces for the company. Molson Coors is also expanding its partnership with Coca-Cola to release Topo Chico Spirited, competing in the fast-growing ready-to-drink cocktail space.
- Molson Coors has invested in its future, added brewery capabilities throughout its network, completing the build of two new state-of-the-art modern breweries in Canada, and building a new variety packing facility in Texas.
Negatives
- Molson Coors forecasts caution about the consumer landscape in the immediate term, not just for beer, but for consumer goods more broadly due to various ups and downs expected over the next few years.
- The beer industry has seen a subset of value-conscious U.S. consumers who are actively trading down into smaller pack sizes, and the economy sector continues to strengthen.
- The broad consumer trends that all companies are facing in 2023 are a driving factor in Molson Coors’ more modest guidance despite its relatively more optimistic outlook for the medium term where it anticipates delivering higher top and bottom line growth rates than expected in 2023.
Q & A sessions,
EMEA-APAC performance
- Top line growth driven by EMEA-APAC.
- Benefited from cycling Omicron-related on-premise restrictions and strong pricing and mix.
- Above premium portfolio reached record levels on the strength of big success brand like MadrÃ.
- World Cup was a contributor, but less than expected due to it being out of cycle and significant rail strikes in the UK.
- Inflationary impacts are more notable in those markets.
Marketing strategy
- Invested strongly behind our core brands and key innovations.
- Approach to media changed to make sure that dollars work hard and more than 50% of media spend is in digital channels.
- Completely overhauled approach to performance-based marketing to maximize effectiveness.
- Planning to increase ad spend in 2023.
Pricing and volume
- Strong price increases in spring and fall of 2022.
- Price elasticities in the spring were well below historical levels.
- Volume was down in Q4 due to changed behavior of consumers and one less trading day.
- Trading performance has improved in 2023.
- Expect price increases in fall 2023 to be closer to historical levels.
Above premium and beyond beer portfolio
- Record levels of 28% in above premium portfolio and a core tenet of the plan was to aggressively premiumize the portfolio.
- Plan to continue growing above premium portfolio and targeting almost a third of NSR from it in the medium term.
- Laid a nice foundation in the spirits space and have a nice innovation coming with Topo Chico Spirited.
NSR targets and innovations
- Ambition of $1 billion MSR target remains, but facing challenges in Latin American business and industry softness in U.S. craft.
- Still have lots of upside with the innovations launched last year, including Simply Spiked and Topo Chico and Vizzy seltzers.
- Launching Topo Chico Spirited in 2023 and have nice line extension with Peach on Simply Spiked.
Coors Light and Miller Lite
- Combined NSR in the U.S. grew in the second half and continue to have strong upward trajectory.
- Strong sales execution across chain and grocery and outpaced Bud Light in both feature and display for seven of the largest chain retailers.
- Strong differentiated brand positions and consistent marketing programs Made to Chill for Coors Light and Miller Liteâs Beer Point of You.
- Good share gains versus competitors and strong programs planned for 2023.
No bad stock 