UPDATE: Molson Coors' Profit, Volume Slump

By William Spain

CHICAGO (Dow Jones) -- In the second quarter after its U.S. operations were subsumed into a joint venture with SABMiller, Molson Coors reported Tuesday that profit fell sharply due to currency fluctuations and lower volume.

Before the start of trading, Molson Coors said it earned $96.8 million, or 44 cents a share, in the period, down from $176.2 million, or 96 cents a share, in the year-ago quarter.

On an adjusted basis, the company said it would have earned 57 cents a share, down 21%.

Sales were cut by more than half, falling to $739 million from $1.6 billion on the spin-off of its U.S. operations and a volume decline of 4.2%.

The average estimate of analysts polled by Thomson Reuters had been for Molson Coors to earn 71 cents a share on sales of $792 billion.

"Our lower fourth-quarter financial results reflect the combined challenges of a much stronger U.S. dollar versus a year ago, significant commodity inflation, and lower sales volume in our major markets," said Peter Swinburn, chief executive, in the earnings report. "Foreign currency movements alone accounted for more than 55% of the year-over-year decline in fourth-quarter profit, and input cost inflation across all of our businesses added another $41 million of headwinds to the quarter."

Shares of Molson Coors fell 6% to $38.04 in early trading.

The joint venture, named MillerCoors, was officially launched at the beginning of July. The combined entity is 58% owned by SABMiller with the balance in Molson Coors' hands. It has a U.S. market share of roughly 30% and an estimated $7 billion in annual revenue.

That venture posted a 40% drop in fourth-quarter profit, largely due to charges, while volume fell 4.4% to 16.1 million barrels and sales to retailers dropped 2.3%. Knocking out the charges, profit would have increased 21%, the company said.

MillerCoors' total net sales were up 3.1% to $1.740 billion as price increases offset the volume declines.