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Molson Coors posts narrower loss

/ Source: The Associated Press

Molson Coors Brewing Co. said Tuesday that it sold more barrels of beer, but expenses and costs for energy and commodities rose as it posted a trimmer first-quarter loss.

The brewer whose brands include Coors Light, Molson Canadian and Carling reported a loss of $30.2 million, or 35 cents per share, for the three months ended March 26 on revenue of $1.15 billion. That was smaller than a loss of $34.2 million, or 54 cents per share, in the same quarter last year on revenue of $1.05 billion.

Excluding special items in the latest quarter, its loss from continuing operations was $400,000, or a penny per share. The average number of shares outstanding increased to 85.7 million from 63.1 million a year ago.

Analysts, on average, expected earnings of 13 cents a share on $1.16 billion in revenue, according to a Thomson Financial poll.

"As we look forward to the balance of 2006, we certainly do not control all the success factors, most notably pricing and commodity and energy inflation," said President and CEO Leo Kiely. "This is show time for our company. We are focused on the one-two punch that will drive our business performance in each of our markets for the balance of the year, that is, growing volume and reducing costs."

The company sold 8.6 million barrels of beer in the quarter, up from 7.7 million barrels a year ago.

Its Class B shares fell $2.48, or 3.5 percent, to close at $69.02 on the New York Stock Exchange. They have traded from $57.37 to $74.10 over the past year.

Kiely said earnings were hurt by a challenging operating environment in the United Kingdom, raw material and energy inflation, and higher corporate expenses, some of which were temporary.

He said one of the biggest upcoming cost challenges will be managing U.S. transportation and packaging material costs, especially in the summer.

Though gas prices have been rising, executives said they have not noticed any effect on U.S. or Canadian beer sales yet.

The company, formed by the merger of Adolph Coors and Molson a year ago, recently sold its 68 percent stake in its Brazilian unit and reported historical results from that business as discontinued operations.

Due to the completion of the Molson Coors merger in February 2005, year-ago figures are prepared as though the merger took place in December 2004, to make results more comparable.

Kiely said the $175 million in cost savings promised with the merger should be realized in 2007, and $75 million more in cost savings were expected by the end of 2008.

The company reported special items totaling $26.8 million, or 21 cents per share, for costs related to closing its brewery in Memphis, restructuring in its European supply chain and closing sales operations in Russia. It also included a $2.7 million credit in stock option income.