Molson Coors Earnings: Soft Q1 as Macro Pressures Bite, Eyes on Premiumization
- Hardik Shah
- 5 hours ago
- 3 min read
TL;DR
Sales & Profits Decline: Net sales fell 11.3% and underlying pretax income plunged 49.5%, pressured by lower volumes, macro challenges, and higher costs.
2025 Guidance Cut: Management revised down sales and income outlook, now expecting low single-digit declines vs. prior growth projections.
Premiumization Push & Resilience: Despite headwinds, core power brands gained shelf space and premium initiatives like Fever Tree and non-alc beverages show promise.
Business Overview
Molson Coors Beverage Company (NYSE: TAP) is a global beverage leader known for iconic beers such as Coors Light, Miller Lite, and Molson Canadian, and expanding into premium and non-alcoholic segments with brands like Fever-Tree, Blue Moon, and ZOA Energy.
The company operates through two main regions:
Americas (U.S., Canada) – Majority of sales, core beer and beyond beer brands.
EMEA & APAC (Europe, Asia Pacific) – Focused on regional power brands and premiumization initiatives.
Molson Coors Earnings
Consolidated
Net Sales: $2.3B (-11.3% reported; -10.4% constant currency)
Underlying Income Before Taxes: $131M (-49.5%)
EPS: $0.59 GAAP (-39%) | $0.50 underlying (-47%)
Free Cash Flow: -$265M (typical cash usage Q1)
Segment Highlights
Americas
Net Sales ↓ 12.3%, driven by lower volumes (-15.6%) and contract brewing exit.
Net Sales per HL ↑ 4.8% from price/mix improvements (premiumization + contract brewing exit).
EMEA & APAC
Net Sales ↓ 6.0% (-4.9% constant currency).
Revenue per HL ↑ 5.4% on favorable price/mix.
"While these mix impacts increase cost of goods sold per hectoliter, they are favorable to margin." — Tracey Joubert, CFO
Forward Guidance
Updated 2025 Outlook (vs. prior)
Net Sales: Low single-digit decline (was low-single increase).
Underlying Income Before Taxes: Low single-digit decline (was mid-single increase).
Underlying EPS: Low single-digit increase (was high-single increase).
Capex: Reduced to ~$650M (+/- 5%) from $750M.
Despite cuts, free cash flow target unchanged at $1.3B and dividend/share buyback commitments remain.
"We are adjusting capital investments to focus on highest priority growth and productivity initiatives." — Gavin Hattersley, CEO
Operational Performance
Volume Deleverage: Shipment timing and softer U.S. demand drove down volumes.
Premiumization: Fever Tree, Coors Banquet (+double digit growth), Peroni (U.S. launch ramping), and non-alc products like Blue Moon Non-Alc drove mix.
Cost Savings & Mix Helped Margins: Despite higher COGS per HL (+6.1%), favorable mix and cost controls mitigated margin pressure.
"Coors Banquet's momentum continued to accelerate with brand volume up double digits... and remains the fastest growing top 15 brand in the U.S." — Gavin Hattersley, CEO
Market Insights
Macro Challenges: Soft U.S. beer industry trends driven by weaker consumer confidence (Michigan Consumer Sentiment Index fell sharply) and economic pressures.
Competitive Pressure: EMEA & APAC faced heightened competition; Molson Coors opted for value over volume approach.
Tariffs & Supply Chain: Limited direct tariff exposure due to domestic production, hedging, and USMCA compliance.
"We believe we are one of the better positioned businesses in our category." — Tracey Joubert, CFO
Strategic Initiatives
Premiumization Priority: Expanding high-margin brands globally; Fever Tree added scale to non-alc and is now integrated in U.S. distribution.
Non-Alc Focus: Growth in Blue Moon Non-Alc and continued investment in ZOA and Naked Life.
Productivity & M&A: Tight cost controls, CapEx cuts, and investments focused on value-adding initiatives.
Capital Returns: Quarterly dividend raised 6.8% (fourth consecutive increase) and $60M buybacks executed.
The Bottom Line
Molson Coors navigated a tough Q1 shaped by macro pressures, shipment timing, and competitive challenges. Revised 2025 guidance reflects a more cautious view, yet the company is steadfast on premiumization, cost control, and cash generation. Strong performance of core brands like Coors Banquet and Fever Tree’s U.S. integration are key offsets, positioning TAP for a potential rebound in the back half.
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