Q3 2024 Earnings Summary
- Molson Coors increased its ownership in ZOA Energy to 51%, seeing significant potential in the better-for-you energy drink segment that is outpacing category growth. ZOA is already a top 10 brand on Amazon, attracting new drinkers, and with the increased stake, Molson Coors now has control over marketing and distribution to drive growth.
- The company retained and slightly increased the significant shelf space gains achieved in prior resets during the latest fall resets, indicating strong retailer relationships and confidence in Molson Coors' brands.
- Coors Banquet continues to deliver double-digit growth year-to-date, gaining industry share for the 13th consecutive quarter and becoming the fastest-growing top 15 beer brand in the U.S. Molson Coors is confident in its capacity to support this growth due to brewery investments.
Metric | YoY Change | Reason |
---|---|---|
Total Revenue | -8% | The decline was primarily due to lower financial volumes in the Americas, which more than offset favorable price and sales mix in some markets. Weaker U.S. demand, combined with the continued wind-down of contract brewing volumes from prior periods, contributed to this year-over-year drop. |
Americas Revenue | -11% | This decrease stemmed from lower brand volumes in the U.S. and Canada, overshadowing recent price increases. It also reflects cycling a strong prior-year performance and the ongoing reduction in contract brewing arrangements, which had boosted Q3 2023 volumes but has since tapered. |
EMEA & APAC Revenue | +5% | Improved premiumization and brand volume growth in key markets boosted revenues, continuing the positive momentum seen in earlier quarters. While some regions faced competitive promotional activity, strong demand in select markets and higher net pricing predominantly drove the uptick. |
Operating Income (EBIT) | -24% | The decline reflected rising cost pressures on raw materials and logistics coupled with lower sales volumes in the Americas. Additionally, higher marketing and SG&A costs—partly from brand-supporting initiatives—outweighed pricing gains, contributing to the drop in operating profitability. |
Net Income | -48% | Primarily driven by the lower EBIT and unfavorable cost dynamics, net income declined sharply from the previous year’s elevated levels. The effect of weaker volumes in key markets, along with inflationary expenses, further compressed margins and reduced profitability. |
EPS (Basic) | -51% | The EPS reduction mirrored the decrease in net income, underscoring the impact of volume softness in the Americas and inflationary cost pressures from earlier quarters flowing into Q3. While pricing actions helped temper some effects, they did not fully offset the earnings headwinds. |
Metric | Period | Previous Guidance | Current Guidance | Change |
---|---|---|---|---|
Net Sales Revenue | FY 2024 | Low single-digit growth | Down ~1% | lowered |
Underlying Pretax Income | FY 2024 | Mid-single-digit growth | Mid-single-digit growth | no change |
Underlying EPS | FY 2024 | Mid-single-digit growth | Mid-single-digit growth, higher end of range | no change |
Underlying Free Cash Flow | FY 2024 | $1.2B ± 10% | $1.2B ± 10% | no change |
COGS (Cost of Goods Sold) per Hectoliter | FY 2024 | no prior guidance | Impacted by volume deleverage, no specific numeric guidance | no prior guidance |
Share Repurchase Program | FY 2024 | no prior guidance | Continued execution of up to $2B, 5-year plan (29% utilized) | no prior guidance |
Metric | Period | Guidance | Actual | Performance |
---|---|---|---|---|
Net Sales Revenue Growth | Q3 2024 | Low single-digit growth | Rose to 3,042.7From 2,265.4, ≈+34% YoY | Beat |
Underlying Pretax Income Growth | Q3 2024 | Mid-single-digit growth | Dropped from 592.2To 451.2, a negative YoY change | Miss |
Underlying Earnings Per Share Growth | Q3 2024 | Mid-single-digit growth | Decreased from 2.00To 0.98, a negative YoY change | Miss |
Topic | Previous Mentions | Current Period | Trend |
---|---|---|---|
Core power brand momentum | Consistently strong growth noted (Banquet +13% in Q2, +23% in Q1, ~20% in Q4 2023). | Coors Banquet up 8% and has gained share for the 13th straight quarter, with combined share (Coors Light, Miller Lite, Banquet) down slightly year-over-year but still up vs Q3 2022. | Continued strength in core brands, remains a key revenue driver. |
Volume challenges in the U.S. beer industry | Industry volume down ~3% in Q2; shipment timing issues in Q1; recognized softness and varied recovery in Q4. | Softer summer, macro pressures; financial volume down 17.9% and brand volume down 6.2% year-over-year in Q3. Guidance adjusted to ~down 1%. | Ongoing pressures; incremental softness realized in Q3. |
Evolution of EMEA and APAC performance | Emphasis on above-premium success and brand-led growth in earlier quarters, with Madri driving revenue. | Strong premiumization (over half of net brand revenue above-premium) and continued growth in Central/Eastern Europe, though the U.K. was softer. | Consistent premiumization gains but ongoing challenges in the U.K. |
Premiumization and above-premium brand strategies (Blue Moon, Peroni) | Recurrent focus on reviving Blue Moon via new marketing; onshore Peroni production also discussed in Q2, Q1, Q4. | Blue Moon showing sequential share stabilization with new packaging and campaigns; Peroni onshored production to improve margins and availability. | Steady emphasis on expanding above-premium offerings for long-term growth. |
Innovation in new categories (Simply Spiked, non-alcoholic, new flavors) | Continual development of flavors, non-alcoholic launches, and brand expansions mentioned in prior quarters. | Simply Spiked surpassed $100 million in sales; launched a new LTO (Cranberry). Happy Thursday introduced for bubble-free, flavor-seeking Gen Z. | Ongoing positive momentum in flavor-focused and non-alcoholic innovations. |
Over-shipment adjustments impacting volume and costs | Deliberate over-shipment noted in Q2 and Q1 (about 1.1 million hectoliters in H1 2024), affecting volumes and costs. | Unwound about 870,000 hectoliters of earlier over-shipments in Q3, pressuring volume/cost structure; expect smaller unwind in Q4. | Managing inventory carefully, though short-term costs and volume are affected. |
Shelf space expansion with retailers | Gained 13% more space for core brands in Q2; expansions also noted in Q1 and Q4. | Retained shelf space gains from prior resets and saw modest further expansion; major dislocations not expected. | Stable or slightly growing shelf space, reflecting retailer confidence. |
Revitalization efforts for Blue Moon and craft offerings | Earlier quarters featured ongoing repositioning, packaging overhauls, and craft market challenges. | Blue Moon sees improved share trends with new marketing, repositioned “Light” variant, and non-alcoholic version (#2 craft NA). | Moderate turnaround, with craft still under pressure but showing positive signs. |
Emerging brand initiatives aimed at Gen Z (Happy Thursday) | Launched in Q1 2024; early mentions in Q2 and Q4 with encouraging retailer response. | Happy Thursday reported early positive feedback. Positioned to capture bubble-free demand from Gen Z. | New introduction with promising early results, potential future growth driver. |
Pabst contract exit and effect on portfolio mix | Prior calls noted a short-term volume headwind but better long-term mix and profitability. | Volume declined by 570,000 hectoliters in Q3 due to Pabst termination; company highlights improved margins and reduced complexity. | Strategic shift away from lower-margin volume toward an enhanced portfolio mix. |
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Guidance and Volume Impact
Q: Explain the impacts on volumes and updated sales guidance?
A: Management reported that U.S. shipments were down 17.9% , with brand volume declining 6.2% , partly due to a 2.6% headwind from the Pabst unwind. Despite tough conditions in July and August, they saw improvements in September and early Q4, expecting better performance in Q4. -
Pricing and Promotional Environment
Q: What is the current pricing and promo environment?
A: Prices are maintained at the top end of the historical 1-2% range. They avoided deeper discounting in the above-premium tier observed this summer , particularly with brands like Peroni, which is moving to onshore production for better margins and consistent supply. They stuck to their pricing strategy despite some consumer shifts due to macroeconomic factors. -
Long-term Growth Prospects
Q: How confident are you in long-term growth?
A: Excluding Pabst, they are in positive territory on the top line. Core power brands have gained 190 basis points over the first nine months , retaining about 80% of last year's share gains. Pricing is stable at around 2% , and they have strong premiumization efforts and innovation plans, including expanding Peroni and Madri. -
Marketing Investment Levels
Q: Are current marketing levels sufficient for growth?
A: Marketing investment is expected to be up versus 2022 but without significant step-ups. They don't plan to match last year's additional $50 million spend in Q4. Investment will focus on core brands and innovations like Blue Moon, Madri, and Peroni. -
Blue Moon and Coors Banquet Performance
Q: Updates on Blue Moon and Coors Banquet?
A: Blue Moon shows signs of stability with sequential improvements in total industry dollar share. Blue Moon non-alcoholic is now the #2 craft non-alc brand. Coors Banquet has gained industry share for 13 consecutive quarters and is growing double digits year-to-date. -
Consumer Trends and Industry Outlook
Q: Any changes in consumer behavior or trends?
A: Value-seeking behavior continues, with shifts to singles and larger packs. While July and August showed economic pressures, September and October saw improvements. Premiumization persists, and consumer confidence has ticked up. -
Simply Spiked and Happy Thursday Performance
Q: Thoughts on Simply Spiked slowdown and Happy Thursday?
A: Simply Spiked remains significant with $100 million in revenue. They've launched seasonal offerings like Cranberry LTO to drive engagement. Positive feedback on Happy Thursday indicates appeal to Gen Z, though it's early to project its impact. -
Shelf Space and Retailer Resets
Q: Have you retained shelf space gains from last year?
A: They've successfully retained and slightly increased shelf space gained last fall and spring. Future resets are expected to involve only small adjustments, and they are pleased with the outcome. -
Q4 Guidance and Outlook Assumptions
Q: What's embedded in your Q4 outlook?
A: They have a good handle on Q4 drivers, including shipments, remaining Pabst impact, and pricing actions. They expect recent industry improvements to continue but are prepared for variability. -
EMEA/APAC Volume Weakness
Q: Why are volumes down in EMEA/APAC?
A: Soft consumer demand in the U.K. due to poor weather and high promotional intensity led to volume declines. They chose not to engage in heavy discounting, focusing on value over volume. Madri continues to drive growth, and easing inflation may improve consumer behavior. -
ZOA Energy Drink Potential
Q: What's the outlook for ZOA energy drink?
A: ZOA targets the growing better-for-you energy segment. It's a top 10 brand on Amazon year-to-date , attracting new consumers and gaining distribution. With majority ownership, they now control marketing and expect it to contribute significantly to revenues.