Molson Coors Brewing Co. said Wednesday its net income increased by 9 percent in its third quarter on higher prices and cost cutting, even though it sold less beer.
The Denver company has been raising prices in the downturn to protect its brands from being seen as too cheap and protect profit margins, even if the amount of beer sold suffers as a result.
The brewer said its net income was $256.1 million, or $1.37 per share, for the three months ended Sept. 25. That's up from $235.3 million, or $1.26 per share, a year ago.
Revenue excluding excise taxes rose 2.5 percent to $875 million. But beer sales volume fell 4 percent.
Excluding several one-times items, earnings were $1.28 per share. Analysts expected earnings of $1.13 per share on revenue excluding taxes of $877.7 million, according to Thomson Reuters.
Shares rose $1.05 or 2.2 percent to $48.27 in midday trading Wednesday.
The quarter's results beat estimates because of the company's cost-cutting efforts, UBS analyst Dara Mohsenian told clients in a note.
Those moves saved $24 million in the quarter and $55 million so far this year. Molson Coors aims to save $150 million by the end of 2012. In addition, MillerCoors, its U.S. joint venture with SABMiller's U.S. unit, cut out $56 million in overlapping costs and found an additional $27 million in other savings in the quarter, which also benefits Molson Coors.
The company raised prices in the quarter, and the total amount of beer sold around the world fell 4 percent.
People have been curbing beer consumption in the downturn, particularly in bars and restaurants. That has hurt Molson Coors' business. It's counteracting that by coming out with new products, which can sell at higher prices, and making other changes, such as new packaging for Miller Lite.
CEO Peter Swinburn said next year in the U.S. the company's strategy will be simple.
"We're going to focus on fewer, bigger, better ideas that will really drive the business," he told investors on a conference call Wednesday.
The amount of beer sold in Britain, where the company has the Carling brand, slumped 12.5 percent in the quarter, worse than an industry drop of 10 percent. Molson Coors said retailers weren't buying as much following their stock-up for the World Cup over the summer.
In Canada, another major market, sales to retailers for the quarter grew 0.4 percent, and the company noted gains in new brands Molson M and Keystone. But mainstays Coors Light and Molson Canadian fell in the low to mid-single digits.
In the U.S., where the company's joint venture with SABMiller sells its beer, sales to retailers dropped 4 percent, continuing a slump.
To offset weakness in more established markets, Molson Coors is increasingly trying to expand in emerging markets such as China. The aim is to woo new drinkers to its Coors Light brand. The unit that includes sales outside the U.S., Canada and Britain saw volume rise 11 percent, though it is a still a tiny portion of Molson Coors' business.
Molson Coors will distribute the Modelo family of brands in the United Kingdom, Japan and the Channel Islands, starting in January.