Market Drunk on Molson Shares (Update)

Molson Coors reports stronger-than-expected earnings, pushing its stock up more than 11% in afternoon trading.
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Updated from 12:32 p.m.

Shares of

Molson Coors

(TAP) - Get Report

spiked more than 10% Tuesday in the wake of a buoyant earnings report, even as the company's top-line sales fell sharply in the quarter.

In afternoon trading Tuesday, Molson Coors' stock changed hands at $42.10, up $3.60, or 9% on double the daily average volume.

The Canadian brewing conglomerate, which owns half of the MillerCoors joint venture along with beer multinational SABMiller, said its first-quarter profit ballooned 121% to $75.7 million, or 41 cents a share, from $34.3 million, or 19 cents a share, a year ago. That easily surpassed Wall Street expectations of 33 cents on an EPS basis.

On the top line, however, Molson Coors recorded a 59% decline in net sales to $559 million from $1.36 billion a year ago, as worldwide demand slumped, the company said. Beer volume fell 2.7% compared with the same period in 2008.

By comparison, beer sales industry-wide have expanded of late, albeit at a glacial pace. According to the Beverage Information Group, total beer revenue

grew 1% last year.

Molson attributed its starkly improved quarterly earnings in the face of declining sales to price hikes and cost cutting. Those moves also helped offset rising prices for raw materials and the effects of a stronger dollar.

MillerCoors, the nation's second-largest brewer behind InBev's Anheuser-Busch, also reported first-quarter financial results Tuesday, saying net sales in the quarter rose 3.8% to $1.72 billion from a year ago. MillerCoors represents the total of Molson's US operations.

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