(Reuters) - Molson Coors Brewing Co (TAP.N) reported a 28 percent decline in fourth-quarter profit as its tax bill more than doubled and beer sales slumped in Canada, its top market.
While total beer volumes rose about 15 percent, helped by the company’s acquisition of central European beer maker StarBev in June, volumes in Canada fell nearly 12 percent.
Molson’s Canadian business, which accounted for about half its fourth-quarter revenue of $1.03 billion, was hit by a 20 percent rise in beer excise tax rates in Quebec and the National Hockey League lockout.
The brewer, known for its Molson Canadian and Miller Coors beers, said sales-to-retail (STRs) in Canada fell 7 percent.
Molson Coors said market share in Canada fell about one share point in the fourth quarter but that it did not expect a further decline as the NHL lockout ended in January.
“They had already flagged a lot of issues and in Canada there were big issues ... it looked pretty poor in the volume point of view,” Nomura Securities International analyst Ian Shackleton said, adding that he expected volumes to normalize in 2013.
STRs in Canada increased in mid-single digit percentages in the first four weeks of the first quarter, Chief Executive Peter Swinburn said on an earnings conference call.
In the United States, STRs in the first four weeks of the first quarter were down in the low single digits, he said.
Molson Coors said effective income tax rate more than doubled from a year earlier. Statutory corporate income tax rate in Serbia, jumped 50 percent in the quarter, it said.
The company entered east European markets such as the Czech Republic, Serbia and Bulgaria with its $3.5 billion acquisition of StarBev, the brewer of Staropramen beer.
Total beer volumes rose 15.3 percent to 14.1 million hectoliters, helped by the acquisition of StarBev.
Underlying net income fell 28 percent in the quarter to $126.1 million, or 69 cents per share. Gross margins fell to 37.2 percent from 41.6 percent a year earlier.
Excluding items, the company earned 69 cents per share.
Net sales rose 9.9 percent to $1.03 billion.
Analysts expected earnings of 64 cents per share on revenue of $1.07 billion, according to Thomson Reuters I/B/E/S.
MillerCoors - the combined U.S. operations of Molson Coors and SABMiller SAB.L - also reported a fall in profit on Thursday, due to increased marketing expenses.
Miller’s marketing expenses included sponsorship of the Mexican soccer league, Liga MX, and launching the new Coors Light “Refreshing Can” in the second quarter of 2013.
Molson Coors shares were down 1 percent at $44.13 on Thursday afternoon on the New York Stock Exchange. SABMiller shares closed down marginally at 3,189 pence on the London Stock Exchange.
Reporting by Siddharth Cavale in Bangalore; Editing by Maju Samuel and Roshni Menon