The Company’s fourth quarter results include the impact of favorable foreign currency movements from the British Pound and Canadian Dollar, which increased underlying pretax income by approximately $5 million. For the full year, foreign currency movements from the British Pound and Canadian Dollar decreased underlying pretax income by approximately $9 million.
Effective Income Tax Rates
The Company’s fourth quarter effective income tax rate was 54 percent on a reported basis and 18 percent on an underlying basis. The increase in the quarterly reported rate was primarily due to an increase in the Serbian statutory corporate income tax rate from 10 percent to 15 percent, effective January 1, 2013. As a result of differences between the book and tax bases of intangible assets purchased in the Central Europe acquisition, we increased our deferred tax liability by $38.3 million because of this tax rate change.
The Company’s full year 2012 effective tax rate was 26 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 16 percent to 20 percent for full year 2013, assuming no further changes in tax laws.
Total debt at the end of the fourth quarter was $4.668 billion, and cash and cash equivalents totaled $624 million, resulting in net debt of $4.044 billion.
Fourth Quarter Business Segment Results
The following are the Company’s fourth quarter 2012 results by business segment:
Canada underlying pretax income decreased 22.2 percent to $101.0 million in the quarter. In local currency, underlying pretax income decreased 25 percent, driven by the impact of lower volume, a mix shift toward higher-cost products, and higher pension expense, along with cycling an extra week and approximately $10 million of positive one-time adjustments in 2011. The 53
week in fiscal 2011 provided an estimated $12 million of underlying pre-tax profit in Canada in the fourth quarter. A 3 percent increase in the Canadian dollar versus the U.S. dollar drove an approximate $3 million positive impact in the quarter.
Sales-to-retail (STRs) decreased 13 percent in the fourth quarter primarily due to a weak Canadian market and cycling the 53
week in 2011. Excluding the 140,000 hectoliter impact of the 53
week, STRs declined 7 percent, driven partially by a more than 20 percent increase in Quebec beer excise tax rates in November and the National Hockey League lockout, which ended in January. Our Canada market share declined approximately one share point from a year ago on an estimated industry volume decline of 5 percent, excluding the 53
week. Fourth quarter total sales volume in Canada for Molson Coors decreased nearly 12 percent.
Net sales per hectoliter increased nearly 2 percent in local currency driven by continued positive pricing.