NEW YORK (Reuters) - Molson Coors Brewing Co (TAP.N) reported much higher-than-expected quarterly profit on Tuesday, boosted by cost savings and strong beer sales in the United States, helping to send its shares up nearly 7 percent.
The maker of Molson Canadian and Coors Light said fourth- quarter net income increased 74.5 percent to $173.2 million, or 95 cents per share, from $99.2 million, or 57 cents per share, a year earlier.
Excluding special items, the company earned 73 cents per share, handily topping analysts’ average estimate of 64 cents, according to Reuters Estimates.
Goldman Sachs analyst Judy Hong said the big surprise from Molson’s results was the magnitude of cost savings at its U.S. and European divisions.
Overall marketing, general and administrative expenses were 3.3 percent lower in the quarter, as aggressive cost controls in Europe led to a 13 percent decline there.
The U.S. business saw $21 million in cost savings, the company said.
Currency fluctuations also aided quarterly income by $12 million, the company said. The weak dollar boosts the value of international sales when they are converted to dollars for inclusion on the company’s income statement.
Net sales rose 4.5 percent to $1.6 billion even though sales volume fell 3.7 percent to 10.5 million barrels, due to one less selling week in the latest fiscal quarter.
Net sales per barrel rose 8.5 percent to $153, the company said, citing price increases.
Sales from wholesalers to retailers rose 1.5 percent, as increases of 5.5 percent in the United States and 0.7 percent in Canada offset a 6 percent decline in Europe.
Business in the United States was strong as cost savings, higher volume and pricing helped offset higher costs for commodities such as grain and aluminum.
U.S. sales of Coors Light rose at a mid single-digit rate, with strong double-digit growth of Blue Moon and low double- digit growth of Keystone Light, the company said.
UBS analyst Kaumil Gajrawala, who was expecting strong U.S. results, said performance was ahead of his expectations, “indicating continued momentum in the core business.”
Gajrawala has a “Buy” rating on Molson shares. It remains one of his top picks in the U.S. beverage sector, due mostly to what he sees as future catalysts -- a March analyst meeting where Molson could announce a share buyback or dividend increase; and possible regulatory approval by late summer to combine its U.S. operations with those of larger rival SABMiller Plc SAB.L.
Molson shares were up $3.09, or 6.8 percent, at $48.45 in midday New York Stock Exchange trading.
Reporting by Martinne Geller; Editing by Lisa Von Ahn/Andre Grenon