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MillerCoors reported a 40% drop in fourth-quarter net income on a pro-forma basis due in part to a $65 million write-down on its Sparks caffeinated alcoholic beverage.

But earnings excluding items at the joint venture - created midyear to combine the U.S. operations of Molson Coors Brewing Co. (TAP) and SABMiller PLC (SAB.JO) - jumped 16.5% amid higher revenue, as price hikes more than offset lower volume.

"While the U.S. beer category softened in the fourth quarter, we increased pricing and net revenue to deliver strong profit growth," said MillerCoors Chief Executive Leo Kiely.

Assuming the venture was in place a year earlier, MillerCoors reported net income of $54.1 million, down from $90.7 million a year earlier. Excluding items such as the Sparks write-down, which occurred in December as the company agreed to stop producing and selling caffeinated-alcoholic drinks under a settlement with more than a dozen state attorneys general, earnings rose to $135 million from $116 million.

The Sparks agreement - in which MillerCoors agreed to remove caffeine, taurine, guarana and ginseng from the drink - was a blow to MillerCoors because Sparks had become the dominant product in the category. But the company said in December it was confident it could continue to increase Sparks sales.

Net sales increased 3.1% to $1.74 billion amid the price hikes, helping push gross margin up to 31.9% from 30.2%.

Volume slid 4.4% to 16.1 million barrels. Five out of the company's six priority brands increased sales to retailers during the period, with Blue Moon and Keystone Light delivering double-digit growth. Coors Light increased 1%, posting its 14th consecutive quarter of growth.

Overall sales to retailers fell 2.3%, reflecting a weaker quarter for the industry and softness in the Miller Lite brand. Sales to wholesalers fell 4.3% as distributors cut back their inventory levels.

Meanwhile, MillerCoors said it is "well on its way" to delivering its goal of $500 million in annual savings by the third year of combined operations.

Molson Coors will release its fourth-quarter results later Tuesday morning.

-By Kevin Kingsbury and Kerry R. Grace, Dow Jones Newswires; 201-938-2136; kevin.kingsbury@dowjones.com