Molson Coors Brewing serves up quarterly earnings

Posted May 5th 2009 9:15AM by Mark Fightmaster
Filed under: Earnings Reports

Although commodity cost pressures continued, Molson Coors Brewing Company (NYSE: TAP) saw its quarterly earnings climb 51% compared to a year ago. Net income excluding special items rose 46% to $216.4 million, far better than the pro forma profit of $136.6 million a year ago.

According to the brewery, five of its six focus brands saw sales to retailers increase. The lone declining brand was Miller Lite, which decreased in the mid-single digits. Coors Light saw its sales to retailers increase in the low single digits, Keystone Light saw a double-digit increase, Miller High Life saw a mid-single-digit increase, and (my wife's favorite beer) Blue Moon helped drive TAP's craft and import portfolio higher. Miller Genuine Draft saw sales to retailers increase after a decade of drops thanks to growth from MGD 64. TAP's total sales increased 3% thanks to pricing strength that offset a 2% drop in volumes. TAP expects to achieve $238 million in synergies by the end of 2009, which is higher than its original forecast of $225 million.

Is it a surprise that beer sales were solid as the economy continues to try and battle higher?

Technically, shares of the brewer face immediate resistance from its 20-week moving average, with its 10-month moving average looming further north. These trendlines could prove to be too much for the stock to handle, although a positive reaction to today's news could help vanquish TAP's 20-week trendline.

Don't buy in to a brief pop from the baron of brew here, with the massive downtrend enveloping the stock, we could see bulls left crying in their beer. Along with the potential trendline resistance, shares of TAP are struggling with resistance at the $39 level, which acted as resistance in the past. Will this resistance be too much for TAP to handle? It certainly appears that way at the moment.

In order to change my tune toward TAP, I want to see the $39 level breached, and a move north of this level sustained for more than a month.

Tags: beer, earnings, inthenews, Molson Coors, MolsonCoors, spirits, tap