Molson Coors Beverage Co.'s chief executive says inflation has been a "significant headwind" for the brewer, weighing on its third-quarter profits even as sales increased.
The company faced particular challenges in central and eastern Europe, where energy costs and inflation are significantly affecting consumers' disposable income, said Gavin Hattersley on a Tuesday call with analysts.
The brewer, which keeps its books in U.S. dollars, revealed it earned a net income of US$216.4 million or 99 cents per share for the quarter ended Sept. 30.
The result compared with a profit of US$453.0 million or US$2.08 per diluted share in the same quarter last year.
Inflation has been easing from near 30-year highs in recent months, but remained high in September at 6.9 per cent.
However, food prices have proved more stubborn, up 11.4 per cent compared with a year ago. They increased at the fastest rate since August 1981 in September and have been rising at a faster rate than all the items the consumer price index encompasses for 10 consecutive months.
The increase in food prices comes as Molson continues to face competition from craft brewers and the market has shown increasing interest in sparkling waters, seltzers and other non-alcoholic offerings.
However, despite weakened demand across the beer industry in Molson's central and eastern European markets over the last quarter, Hattersley did not appear overly concerned about the future of the category.
"Beer has been around for 1,000 years. It's the most popular alcohol beverage in the world. In fact, outside of water and tea, beer is the third most popular beverage of any kind in the whole world, so I don't think it's going anywhere and our results over the past few years would suggest as much," said Hattersley.
"If you go back a few years, people were we're speculating the light beer was dead because of seltzers, and ... I don't think you hear a lot about that anymore today. In fact, you hear quite the opposite."
Net sales for the quarter totalled US$2.94 billion, up from US$2.82 billion in the third quarter of 2021.
Its underlying net income amounted to US$1.32 per diluted share for its most recent quarter, down from US$1.75 a year ago.
Analysts on average had expected a profit of US$1.36 per share and US$2.89 billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.
Molson's class B shares closed down C$4.51 at C$65.49 on the Toronto Stock Exchange on Tuesday.
This report by The Canadian Press was first published Nov. 1, 2022.
Companies in this story: (TSX:TPX.A, TSX:TPX.B)
Tara Deschamps, The Canadian Press
Note to readers: This is a corrected story. An earlier version incorrectly stated the direction of change of the company's underlying net income per diluted share.
