International brewing brand Molson Coors reported a fall in underlying pre-tax profits by 21.5% in Europe to $68.1m (£43.92m) in its second quarter “due to unfavorable foreign currency movements and the termination of contracts in the UK”.
On a constant-currency basis, underlying pretax income decreased 8.3%, due to the termination of its Modelo brands and Heineken brewing contracts in the UK.
Excluding the impact of the terminated contracts, the company said its Europe constant-currency pretax income would have increased in the quarter, driven by higher sales volume, positive pricing and lower costs. However, foreign currency movements negatively impacted underlying results by $11.5m.
Europe sales volume decreased 1.1%, due to the termination of the Modelo brands contract in the UK. Europe net sales per hectolitre decreased 2.6% in local currency, primarily due to the loss of the Modelo brands in the UK, lower contract brewing volume and negative mix.
Despite the overall decline it increased net sales per hectolitre in all of its major Europe markets apart from Serbia.
Globally in this quarter, net sales decreased 15.4% to $1.006bn and by 3.3% in constant currency while net sales per hectolitre decreased 14.4% to $116.63, or by 2.2% in constant-currency.
Molson Coors underlying pretax income was $327.9m, down by 0.9%, but in constant currency it was an increase of 5.9%. Underlying after-tax income stood at $263.8m ($1.41 per diluted share), which was down by 9.9%.
Underlying EBITDA was $455.3m, a decrease of 4.4%.
In the UK the company incurred a charge of $9.3m associated with the closure of its brewing facility in Alton and expense of $29.4m related to the repatriation of exclusive distribution rights for the Staropramen brand in the UK after ending its agreement with Carlsberg.
