TAP ,,, CEO: Molson Coors Weighs Changes in Brazil
Wednesday May 11, 8:49 pm ET
Molson Coors Decision on Troubled Brazil Operations Coming Soon, CEO Tells Shareholders
MONTREAL (AP) -- Molson Coors Brewing Co. has completed a preliminary assessment of its troubled Brazilian operations and a decision on what to do with them is pending, Chief Executive Leo Kiely said Wednesday at the first annual shareholders meeting since the brewers merged in February.
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"We've had due diligence teams working in Brazil for the past several weeks and we'll be presenting our initial assessment to our board of directors (Thursday)," Kiely told the meeting held at Molson's historic brewing plant in Montreal. "Making the right strategic choice in Brazil is critically important."
Chief Financial Officer Timothy Wolf said the company is reviewing options for all its noncore assets, including its 20 percent stake in the Montreal Canadiens hockey club. But Wolf added it would not be a good time to sell the club, while the National Hockey League is idle during a prolonged labor dispute with players.
Kiely would not speculate on what the company may do with the Brazil brewery, but said the company has to consider how much it would cost to fix it. The distribution system also has to be examined and the company has to determine how much more it could cut costs, he said.
"In recent months, the team in Brazil has made significant progress rationalizing the cost base of the business, but clearly much more work is needed."
Molson acquired the Kaiser brand in Brazil in 2002 and the Bavaria brand in that country previously. Together they have 10 percent of the large Brazilian beer market but sales and market share are on the decline due to distribution and marketing problems.
Kiely also said a major marketing campaign is underway to get its flagship but dawdling Molson Canadian and Coors Light brands back on the rails in Canada, where Molson Coors brands still have the leading market share at 42 percent.
In the United States, Kiely said there is a similar challenge for Coors Light, in the face of pricing pressures.
Molson Coors revealed this week it is moving to Montreal the production of Blue Moon, a premium Belgian lager it sells in the United States. Wolf said more brand bottling may be shifted to Canada, such as Zima XXX, to absorb production from the closure of a Coors brewery in Memphis, Tenn.
Kiely said the company is on track to achieve the $175 million in synergies it said would result from the merger, over three years.
Molson Coors Class B shares fell 46 cents to close at $61.35 Wednesday on the New York Stock Exchange, 40 cents under the previous low set since the merger.
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