“We remain focused on driving profits across all of our businesses and implementing our growth strategy of investing behind our core brands, delivering innovation, leveraging our above-premium portfolio and scaling our existing business in emerging markets.”
Cost Savings Highlights
In the second quarter, the Company delivered $14 million of Resources for Growth Two (RFG2) cost reductions, for a total of $150 million in savings since the program began over two years ago. As a result, we have achieved our three-year RFG2 Program target of $150 million six months early.
MillerCoors achieved cost savings of $32 million in the quarter. Molson Coors benefits from 42 percent of these cost savings.
The Company’s second quarter results include the impact of unfavorable foreign currency movements from the British Pound and Canadian Dollar, which decreased underlying pretax income by approximately $9 million.
Effective Income Tax Rates
The Company’s second quarter effective income tax rate was 21 percent on a reported basis and 18 percent on an underlying basis. The Company estimates that its underlying effective tax rate will be in the range of 17 percent to 21 percent for full year 2012, assuming no further changes in tax laws.
Total debt at the end of the second quarter was $4.9 billion, and cash and cash equivalents totaled $516 million, resulting in net debt of $4.4 billion. These debt balances include $2.9 billion of MCCE acquisition-related debt.
Quarter Business Segment Results
Following are the Company’s second quarter 2012 results by business segment:
Canada underlying pretax income decreased 0.6 percent to $139.0 million in the quarter due to adverse foreign currency movements. Canada underlying income in local currency increased 4 percent, driven by higher volume, positive net pricing, cost reductions, and income from the addition of North American Breweries (NAB) contract brewing, which were partially offset by increased marketing and sales investments this year and the cycling of lower employee incentive costs last year. A 4.4% decline in the Canadian Dollar versus the U.S. dollar drove an approximate $7 million negative impact.