PORTLAND, Ore. ? Molson Coors Brewing Co.'s third-quarter profit tumbled 23 percent as high costs and high unemployment among its core customers continued to take a toll on the brewer.
Molson Coors and other major beer makers have struggled in the down economy as young American men have faced particularly high levels of unemployment. The company, which makes products like Miller Lite, Coors Lite and Carling, also saw lower-than-expected sales in the U.K. And the industry is seeing consumers overall shift toward more craft beers, wines and spirits.
The company is also struggling with higher costs for commodities such as barley, aluminum and fuel.
"We have had the equivalent of an earthquake," Peter Swinburn, president and CEO of Molson Coors, said of the recession. "Our core consumer was hit overnight... It is very difficult to recover from that, it takes time to rebuild."
The company reported Wednesday that its net income fell to $197.4, or $1.06 per share, for the quarter that ended Sept. 24. That's down from $256.1 million, or $1.38 per share, a year ago. Excluding the cost of writing down its Sparks brand and other one-time items, it earned $1.14 per share.
That missed analysts' average forecast for adjusted earnings of $1.25 per share, according to FactSet.
Revenue rose 9 percent to $954.4 million, topping analysts' average forecast for $942.4 million with a boost from foreign currency exchange, higher prices in some regions and an expansion into emerging markets.
However, the company sold 0.8 percent less beer in the quarter because of struggles in its core markets.
Molson Coors said it saw weaker-than-expected results in the U.K., as sales in bars fell and an anticipated summer beer-buying rebound never surfaced. The company reported lower volume, lower prices and higher costs there. Sales to retailers declined 3 percent due to the weak economy's toll on consumers.
The company said higher prices and favorable exchange rates in Canada offset higher costs. But company leaders said they do not yet have the market share they want in that key beer market.
In the U.S., Molson Coors faced higher costs for its joint venture ? Miller Coors ? for marketing, information systems and other costs. The venture with SABMiller PLC to sell beer in the U.S. reported Wednesday that its net income fell 44 percent on continued weak sales in the U.S.
"It just continued to be a tough operating environment," said Brian Yarbrough, an analyst with Edward Jones. "There's just no growth."
Molson Coors said it will try to boost volume by continuing to push into emerging markets, promote its smaller craft lines and develop new products, such as a fruit-flavored clear malt product in the U.K. But the company said in some ways, it must wait for the economy to recover before it can as well.
"We need to protect those brands so when (customers) return, they are relevant," Swinburn said.
Top competitor Anheuser-Busch InBev reports its results next week.
Shares of Molson Coors fell $1.33, more than 3.3 percent, to close at $39 Wednesday.
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AP Business Writer Mae Anderson contributed to this report from New York.
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