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Mar 31, 2020
Molson Coors Q1 2020 Earnings Report
Net sales revenue decreased, and a net loss was reported due to coronavirus impacts.
Key Takeaways
Molson Coors reported an 8.7% decrease in net sales and a net loss of $117 million for Q1 2020, primarily due to the adverse impacts of the coronavirus pandemic, including on-premise channel closures and related keg returns. The company is implementing mitigating actions focused on employee safety, deleveraging, and liquidity.
Net sales decreased by 8.7% reported and 8.2% in constant currency.
U.S. GAAP net loss was $117 million, or a loss of $0.54 per share.
Non-GAAP EPS decreased 32.7% to $0.35.
Underlying EBITDA was $352 million.
Molson Coors
Molson Coors
Molson Coors Revenue by Segment
Revenue by Segment
Americas Revenue
CapyFin.comEMEA&APAC Revenue
CapyFin.com Forward Guidance
Molson Coors withdrew its financial outlook for 2020 due to the uncertainty caused by the coronavirus pandemic, expecting a significant adverse impact on net sales and profit performance, especially in Q2 2020. They expect income tax expense of approximately $100 million to $200 million upon enactment in the second quarter of 2020.
Positive Outlook
- Taking the necessary steps to protect our employees by implementing additional health and safety measures in breweries and distribution centers, instituting a paid leave policy, voluntary paid leave program and "thank you" pay incentive for certain essential brewery employees
- Supporting our local communities with charitable efforts including providing fresh water and hand sanitizer
- Reducing 2020 capital expenditures by approximately $200 million
- Substantially reducing discretionary spending, limiting new hiring, and significantly decreasing marketing spend corresponding to the current environment
- Shifting marketing investments to focus on our key media platforms that our consumers are at and eliminating spend that will not deliver value in the current environment
Challenges Ahead
- We currently expect a significant adverse impact, particularly in the second quarter of 2020, to both net sales and profit performance for fiscal year 2020, and, possibly, beyond, due to the resulting closure of the on-premise channel in effectively all of our markets, as well as the anticipated negative impact of the pandemic on the global economy.
- Specifically, we estimate that approximately 23% of our 2019 consolidated net sales resulted from on-premise consumption, with approximately 17% of our North America net sales and approximately 50-55% of our Europe net sales each coming from this important part of the industry, and in nearly all of our markets the on-premise business has been effectively reduced to zero.
- While off-premise sales continue to perform well, we do not expect them to fully offset the loss of the on-premise volume.
- We estimate that this will result in negative trends in volume, net sales, and mix versus our prior estimates and expect these trends to continue at least through the end of the year and in particular in the second quarter.
- Separately, in Europe, we estimate that brand volumes are down approximately 40% for the first four weeks of April 2020.