By Atossa Araxia Abrahamian
Aug 6 (Reuters) - Molson Coors Brewing Co on Tuesday reported a higher-than-expected quarterly profit thanks to a recent addition to its European business, sending shares up almost 5 percent.
The strong results were mainly due to the company’s acquisition of Central European brewer Starbev in June 2012, which increased the company’s capacity in countries like the Czech Republic and Romania and boosted sales almost 18 percent.
These sales helped offset bad weather and what was otherwise weak demand for beverages in the United States, Canada and elsewhere in Europe.
“Consumer demand was soft, but due to a combination of good cost management and the benefit of the Eastern Europe business, the numbers came through well,” said Chief Executive Peter Swinburn.
The company’s second quarter also benefited from a lower tax rate in Canada, Swinburn said.
MillerCoors, the combined U.S. operations of Molson Coors and SABMiller, reported a 5.3 percent decline in second-quarter net income on Tuesday, citing low volume and a difficult quarter for the beer industry.
Swinburn said higher priced beverages, such as Redd’s Apple Ale and Leinenkugel’s Summer Shandy, gained market share in the quarter. The premium lines grew to make up more than 9 percent of Molson Coors’ portfolio in the quarter, up from 7 percent previously.
However, Molson Coors said that its light and lower-priced beers did not sell as well, and that it expected overall consumer demand for beer to remain weak through 2013.
To boost sales, the company said that it would spend more money on marketing and innovation.
Net income rose to $278.4 million, or $1.51 per share, from $105.1 million, or 57 cents per share, a year earlier.
On an adjusted basis, Molson Coors earned $1.51 per share. Analysts on average expected a profit of $1.38 per share, according to Thomson Reuters I/B/E/S.
Net sales rose 17.9 percent to $1.18 billion.
The company said in a conference call that in the first month of the third quarter, U.S and European sales volume rose at a low single digit rate, while Canadian sales for the same period fell by a low single digit rate and international sales volume fell at a low double digit rate.
Shares of Molson Coors were up 4.6 percent at $52.38 on the New York Stock Exchange.