molson coors brewing company annual new york … · 5 strong performance during tough times •...

M O L S O N C O O R S B R E W I N G C O M PA N Y A N N U A L N E W Y O R K I N V E S T O R / A N A LY S T M E E T I N G

J U N E 2 5 , 2 0 1 4

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PETER SWINBURN, PRESIDENT & CEO MOLSON COORS BREWING COMPANYPETER SWINBURN, PRESIDENT & CEO MOLSON COORS BREWING COMPANY

Forward‐Looking Statements: This press release includes estimates or projections that constitute “forward‐looking statements” within the meaning of the U.S. federal securities laws. Generally, the words “believe,” "expect,” "intend,” "anticipate,” “project,” “will,” and similar expressions identify forward‐looking statements, which generally are not historic in nature. Although the Company believes that the assumptions upon which its forward‐looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct. Important factors that could cause actual results to differ materially from the Company’s historical experience, and present projections and expectations are disclosed in the Company’s filings with the Securities and Exchange Commission (“SEC”). These factors include, among others, impact of competitive pricing and product pressures; health of the beer industry and our brands in our markets; economic conditions in our markets; pension plan costs; availability or increase in the cost of packaging materials; our ability to maintain manufacturer/distribution agreements; our ability to implement our strategic initiatives, including executing and realizing cost savings; our ability to successfully integrate our Central Europe business; changes in legal and regulatory requirements, including the regulation of distribution systems; increase in the cost of commodities used in the business; our ability to maintain brand image, reputation and product quality; our ability to maintain good labor relations; changes in our supply chain system; additional impairment charges; the impact of climate change and the availability and quality of water; risks relating to operations outside North America; success of our joint ventures; lack of full control over the operations of MillerCoors; and other risks discussed in our filings with the SEC, including our Annual Report on Form 10‐K for the year‐ended December 31, 2013, which are available from the SEC. All forward‐looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions. You should not place undue reliance on forward‐looking statements, which speak only as of the date they are made. We do not undertake to update forward‐looking statements, whether as a result of new information, future events or otherwise.

Reconciliations to Nearest U.S. GAAP Measures: The following presentation includes certain "non‐GAAP financial measures" as defined in Regulation G under the Securities Exchange Act of 1934. A schedule is posted on the Company’s website at MolsonCooors.com (in the “Investor Relations" section) which reconciles our results as reported under Generally Accepted Accounting Principles and the non‐GAAP financial measures included in the following presentation.

3

FORWARD LOOKING STATEMENTFORWARD LOOKING STATEMENT

4

LAST YEAR TO THIS YEAR – KEY TAKEAWAYSLAST YEAR TO THIS YEAR – KEY TAKEAWAYS

• Investing behind core brands• Driving share in above premium• Delivering value-added innovation• Commercial excellence• Cost reductions

BRAND-LED PROFITGROWTH

• Capital expenditure driving efficiencies• Working Capital improvements

CASHGENERATION

• Disciplined cash use• Return-driven criteria• Short-term priority: deleverage

CASH AND CAPITAL ALLOCATION

Profit AfterCapital Charge

(TSR)TOTAL

SHAREHOLDER RETURN

• Gaining traction against our commercial strategy• Continue to improve the efficiency of our operations• Strategic discipline driving improved financial performance

5

STRONG PERFORMANCE DURING TOUGH TIMESSTRONG PERFORMANCE DURING TOUGH TIMES

• Generated more than $860 million in synergies and cost savings since 2008

• Increased underlying free cash flow generation by nearly 76%

• To $892 million in 2013, from $508 million in 2008

• Grown EBITDA every year since 2008

• Increased underlying after-tax profit since 2008 at a compound annual rate of nearly 8%

• Increased our quarterly dividend by 16 percent in 2014

• Adopted dividend payout ratio target

• Peter Swinburn, CEO, Molson Coors

• Tom Long, CEO, MillerCoors

• Stewart Glendinning, CEO, Molson Coors Canada

• Mark Hunter, CEO, Molson Coors Europe

• Gavin Hattersley, CFO, Molson Coors

• Closing Remarks

• Q&A with Full Leadership Team

• Reception

6

TODAY’S AGENDA – FOCUS ON CORE MARKETSTODAY’S AGENDA – FOCUS ON CORE MARKETS

1 Does not include underlying operating losses for Corporate and MCI. Totals may not sum due to rounding. Non GAAP underlying income is calculated by excluding special and other non-core items from the nearest U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website.

7

MOLSON COORS OVERVIEWMOLSON COORS OVERVIEW

46%

36% 14%

4%Worldwide Beer

Volume

44%

28%26%

2%Net Sales

48%

18%

34%

Underlying Operating Income1

INTERNATIONAL MARKETS

EUROPE

CANADA

UNITED STATES

8

CONTEXT – IMPROVING ECONOMIES IN OUR CORE MARKETSCONTEXT – IMPROVING ECONOMIES IN OUR CORE MARKETS

GDP – Real Change % (Per Annum) Recorded Unemployment %

(7.0)

(5.0)

(3.0)

(1.0)

1.0

3.0

5.0

7.0

2008 2009 2010 2011 2012 2013 2014F 2015F 2016FUSA CANADA UNITED KINGDOM

BULGARIA CROATIA CZECH REPUBLIC

SERBIA

2008 2009 2010 2011 2012 2013 2014F 2015F 2016F

Source: EIU (The Economist Intelligence Unit), May 2014GDP = Gross Domestic Product

0.0

5.0

10.0

15.0

20.0

25.0

2008 2009 2010 2011 2012 2013 2014F 2015F 2016FUSA CANADA UNITED KINGDOM

BULGARIA CROATIA CZECH REPUBLIC

SERBIA

2008 2009 2010 2011 2012 2013 2014F 2015F 2016F

• Improving GDP trends in North America, slower in Europe• Employment outlook improving across most markets• Growing consumer confidence

CASH AND CAPITALCASH GENERATIONBRAND-LED PROFIT GROWTH

CONTEXT -- RAPIDLY CHANGING CONSUMER DYNAMICSCONTEXT -- RAPIDLY CHANGING CONSUMER DYNAMICS

• Fewer beer–only drinkers

• Demand for more innovation in beer

• Growing interest in craft

• Brand marketing requires more two-way engagement with consumers online

• Greater consumer interest in corporate social responsibility

9

10

GROWTH STRATEGY ALIGNED WITH THESE TRENDSGROWTH STRATEGY ALIGNED WITH THESE TRENDS

• Investing behind core brands• Driving share in above premium • Delivering value-added innovation• Commercial excellence• Cost reductions


• Capital expenditure driving efficiencies• Working capital improvements

CASHGENERATION



11

BRAND-LED GROWTH ENABLERSBRAND-LED GROWTH ENABLERS

DRIVING SHARE

IN ABOVE PREMIUM

DRIVE COST SAVINGS AND

COMMERCIAL EXCELLENCE

DELIVERING VALUE

ADDED INNOVATION

INVESTING BEHIND

CORE BRANDS


INVESTING BEHIND CORE BRANDSINVESTING BEHIND CORE BRANDS

• Core brands account for nearly 70% of total volume

• Strong brand positions in the most profitable beer markets

• The US premium light category is 6x larger than the craft category

• US - Coors Light (#2) and Miller Lite (#4)

• Canada - Coors Light (#1) and Molson Canadian (#3)

• Carling - UK’s #1 selling beer

• All of our leading brands across Central Europe are premium, most #1 or #2

12


DRIVING SHARE IN ABOVE PREMIUMDRIVING SHARE IN ABOVE PREMIUM

• Tenth and Blake is the leading craft brewer in the US

• Blue Moon is the largest craft brand in US

• Leinenkugel’s the fifth-largest craft brand in US

• Canada above premium portfolio captures more than 26% of the overall segment (*)

• Doom Bar is largest on-premise cask ale in the UK

• UK craft portfolio growing at over 25% per year

• Continued strength of Staropramenacross Europe

13

* Excludes the Modelo brands in Canada


DELIVERING VALUE ADDED INNOVATIONDELIVERING VALUE ADDED INNOVATION

• A leader in the industry

• Creates brand loyalty

• Attracts new drinkers

• Builds excitement in the category

• Delivered 5.8% of NSR in 2013

• On-target for nearly 7% of 2014 NSR

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15

PERFORMANCE IS UNDERPINNED BY COMMERCIAL EXCELLENCEPERFORMANCE IS UNDERPINNED BY COMMERCIAL EXCELLENCE

CONSISTENT GLOBAL FRAMEWORK

CAPABILITIES

Management and People

Global Standard Technology

Commercial Excellence Academy

ENABLERS

PILOT AREA: OUTCOMES

Field Sales Management

Revenue Management

UK: VOLUME IMPROVEMENT

CANADA: VOLUME IMPROVEMENT

+6.5% -- Distribution vs. Control

+18% -- Brilliant Execution

+6 calls/day -- Call Coverage

+2.2% -- Distribution vs. Control

+14% -- Brilliant Execution

+4 calls/day -- Call Coverage

16

MOLSON COORS INTERNATIONALA CRITICAL PART OF OUR BRAND-LED GROWTH STRATEGY

MOLSON COORS INTERNATIONALA CRITICAL PART OF OUR BRAND-LED GROWTH STRATEGY

17

MCI STRATEGYASSET-LIGHT, INTEGRATED MARKETING & BRILLIANT EXECUTION

MCI STRATEGYASSET-LIGHT, INTEGRATED MARKETING & BRILLIANT EXECUTION

Perfect Outlet Execution Great Quality BeerDisruptive Marketing


* Including sales volume and royalty volume

445

697

0

200

400

600

800

2009 2013

Coors Light International Volume* (000s Hl)

18

BUILDING A FAST GROWING GLOBAL PORTFOLIO OF ABOVE PREMIUM BRANDS

BUILDING A FAST GROWING GLOBAL PORTFOLIO OF ABOVE PREMIUM BRANDS

666

2,250

0

500

1,000

1,500

2,000

2,500

2009 2013

MCI Total Volume* (000s Hl)

+12% CAGR +36% CAGR


1 Non-GAAP underlying pretax income (loss) is calculated by excluding special and other non-core items from the nearest U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website. HL includes financial and royalty volume.

19

MCI ON TRACK FOR 2016 PROFITABILITYMCI ON TRACK FOR 2016 PROFITABILITY

-$35

-$25

-$15

-$5

$5

2009 2010 2011 2012 2013

MCI Underlying Pretax Income(loss) per HL1

2014 20162015

MCI will move past breakeven to deliver meaningful profit growth beyond 2016

• The fundamentals of our business are strong and improving

• We have a disciplined growth strategy that is yielding improved financial results

• Delivering an increasing share of revenue from innovation

• Strong growth of core brands

• Accelerated success in the above premium category

• Increased operational efficiency, and

• Strong commercial execution

• Well positioned to grow as economic conditions continue to improve

20

MOLSON COORS IS WELL POSITIONEDMOLSON COORS IS WELL POSITIONED

U.S. UPDATE: TOM LONG, CEO MILLERCOORSU.S. UPDATE: TOM LONG, CEO MILLERCOORS

21

Since 2008 launch …

• More than $1 billion in savings/synergies

• More than $6 billion in underlying net income since inception

• Net cash distributions to parent companies of nearly $5.5 billion

22

A STRONGER, MORE COMPETITIVE BREWERA STRONGER, MORE COMPETITIVE BREWER

Major Breweries

14.4%14.8%

15.8%16.5% 16.3%2.3%

2.4%

3.5% 3.4% 3.3%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

19.0%

20.0%

2010 2011 2012 2013 2014 Q1

Underlying Net Income Margin% Domestic Net Revenue per HL Growth

23

STRONG REVENUE GROWTH AND MARGIN EXPANSIONSTRONG REVENUE GROWTH AND MARGIN EXPANSION

* Non-GAAP underlying Net Income is calculated excluding special and other non-core items from U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website.

Millennial tastes have shiftedAn explosion of new brewers

0%

10%

20%

30%

40%

50%

60%

70%

80%

24

MILLENNIALS DRIVING SIGNIFICANT CHANGE IN TOTAL BEVERAGE ALCOHOL MARKET

MILLENNIALS DRIVING SIGNIFICANT CHANGE IN TOTAL BEVERAGE ALCOHOL MARKET

TBA servings distribution among consumers ages 21-34

Generation X: 1999 Millennials: 2012

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EVOLVE OUR PORTFOLIOEVOLVE OUR PORTFOLIO

EconomyPremium RegularPremium LightAbove Premium

9%

56%

5%

30%

2013 MillerCoors*

13%

56%

4%

27%

2016 MillerCoors*

*Percent of Total VolumeSource: MillerCoors projections

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RIGHT STRATEGYRIGHT STRATEGY

Drive core brands

27

• COMMERCIAL #1

28


Drive core brands

29

• COMMERCIAL #1

30


Capture Above Premium Growth

31

• COMMERCIAL #1

32


Capture Above Premium Growth

33


Accelerate innovation

DRIVING NET PRODUCER REVENUE INCREASE THROUGH INNOVATIONDRIVING NET PRODUCER REVENUE INCREASE THROUGH INNOVATION

34

0.2% 0.4%

1.2%

5.8%

7.1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2010 2011 2012 2013 Q1'14

Brand Innovation % of Total Domestic Net Producer Revenue

35

MILLERCOORS GAINING CHAIN CATEGORY LEADERSHIPMILLERCOORS GAINING CHAIN CATEGORY LEADERSHIP

24%30%

35%

45% 47%

0%

10%

20%

30%

40%

50%

60%

2009 2010 2011 2012 2013

24% 47% MillerCoors Category Captain

CM Profit group named MillerCoors the number-one alcohol beverage supplier

36

RETAILERS SEE STRONGER CATEGORY GROWTH WITH MILLERCOORS AS CAPTAIN

RETAILERS SEE STRONGER CATEGORY GROWTH WITH MILLERCOORS AS CAPTAIN

Source Nielsen Latest 52 weeks Dec. 2013

+ 3.2 pts.over ABI

MillerCoors Captain

-0.5

3

2

1

0

-1

3

2

1

0

-1

+2.7

ABI Captain

Good for retailers. Good for distributors. Good for MillerCoors.

37

BUILDING WITH BEERBUILDING WITH BEER

Goal: Accelerate Premium Light growth by 2% trend improvement

• Through May, more than 165 distributors have been trained

• Nearly half are seeing positive or flat trend improvement on Premium Lights

• Pilot distributors, on average, are seeing 1.9% Premium Light trend improvement

Over $4.0M in distributor revenue gained so far through the initiative

Distributors who have used SmartSKU have seen positive results:

• Programs completed in May, 64% of SKUs placed on the shelf were reordered, nearly double the average rate historically

38

SMARTSKUSMARTSKU

Source Nielsen Latest 52 weeks 12-7-13

REVENUE MANAGEMENTREVENUE MANAGEMENT

39

• Optimizing price and mix

• Cutting-edge tools

• Power of premium lights on premise

• Better insights to grow independents/small accounts

40


CANADA UPDATE: STEWART GLENDINNING, CEO CANADACANADA UPDATE: STEWART GLENDINNING, CEO CANADA

41

42

CANADACANADA

CANADA

Major Breweries

Challenging Beer Category

• Average annual decline of 1% since 2009

• Lingering unemployment limiting growth

• Continuing challenges from wine and spirits

Margins have been under pressure as discounting and promotions have been more frequent

Focused on driving change

• Strong brand building led to market share gains by Molson Canadian –best performance in 10 years

• Double digit growth in our craft brands Creemore Springs and Granville Island

• Increasing share of above premium with successful rollout of Coors Banquet

• Grew share in 2013 in value brands

43

DESPITE HEADWINDS, OUR CANADA BUSINESS IS DRIVING CHANGEDESPITE HEADWINDS, OUR CANADA BUSINESS IS DRIVING CHANGE

• Attacking our cost base and increasing our execution capability• We have a clear plan for addressing underperformance by Coors Light

44


DRIVING SHARE

IN ABOVE PREMIUM



DELIVERING VALUE

ADDED INNOVATION

INVESTING BEHIND

CORE BRANDS


What How

Strong marketingsupport

50% of volume, over 60% of marketing spend

Innovation driving newsVented cans for a smoother pour, wide-mouth aluminum bottle

Sponsorships provide important activation opportunities

NHL, football, music

45

INVESTING BEHIND OUR CORE BRANDSINVESTING BEHIND OUR CORE BRANDS

Core brands are the backbone of our business


Market Size Lead Brands Market Position Total MCBC Share

Ontario Coors Light / Canadian 1st, 2nd

Quebec Coors Light 1st

Alberta Molson Canadian 3rd

BC Molson Canadian 2nd

Manitoba Coors Light 6th

Saskatchewan Coors Light / Canadian 1st, 2nd

Nova Scotia Coors Light 3rd

New Brunswick Coors Light 3rd

Newfoundland Coors Light / Canadian 1st, 3rd

PEI Coors Light / Canadian 2nd, 3rd

BRAND BUILDING: LEADING POSITIONS ACROSS CANADABRAND BUILDING: LEADING POSITIONS ACROSS CANADA

46


Turnaround a result of:

• Strong creative execution and integrated supporting programs

• Fully leveraged hockey and music pillars

• Innovation behind core lager and extended trademark

47

BRAND BUILDING – CORE: MOLSON CANADIAN GROWING SHAREBRAND BUILDING – CORE: MOLSON CANADIAN GROWING SHARE

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q12014

Molson Canadian National Market Share


Turnaround a result of:


• Fully leveraged hockey and music pillars


49

BRAND BUILDING – CORE: MOLSON CANADIAN GROWING SHAREBRAND BUILDING – CORE: MOLSON CANADIAN GROWING SHARE

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q12014

Molson Canadian National Market Share


Areas of focus:



51

LEVERAGING LEARNING'S FOR COORS LIGHTLEVERAGING LEARNING'S FOR COORS LIGHT

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Coors Light National Market Share

LEVERAGING LEARNINGS FOR COORS LIGHT TURNAROUNDLEVERAGING LEARNINGS FOR COORS LIGHT TURNAROUND

52

New creative platform: • Re-engage with Millennial and

Generation X with a new creative

More integrating programs:• We will bring back optimized integrated

programs that are more competitive across both retail & on-premise

Innovation:• Focus on rollout of Banquet across the

country, as well as, the launch of vented cans

Win at the point of sale:• Improved store execution leveraging

the power of the Coors master brand and appropriate local promotions to support demand

CONNECTING WITH CONSUMERS EMOTIONALLYCONNECTING WITH CONSUMERS EMOTIONALLY

53

• Our campaign aims to connect more closely with Millennials and Gen Xers

• Our marketing focus has been more on functional benefits

• Our social media sites have a large following of actively engaged consumers

• Coors Light is at its best when it’s humorous and edgy with a point of view

• Coors Light is getting back to its roots

COORS LIGHT LOVESEAT


Key Strategies:

• 6 Pints expansion into Quebec

• 6 Pints added to portfolio for Mainstream selling organization

• Portfolio expansion with more experimental offerings E.g. Mad and Noisy

• Innovation driving news with retailers –more limited time / seasonal offerings

54

OWNED ABOVE PREMIUM VOLUME IS UP OVER 50% SINCE 2009OWNED ABOVE PREMIUM VOLUME IS UP OVER 50% SINCE 2009

(HL 000s)

0

100

200

300

400

500

600

700

2009 2010 2011 2012 2013

Molson Coors Canada Owned Above Premium Volume


55

HIGH REVENUE INNOVATION BUILDING MARGINSHIGH REVENUE INNOVATION BUILDING MARGINS

$30

* 24 bottle equivalent – Based on 2014 rates in all provinces

Innovation 3% of volume; 4% of revenue

Value

Premium

Above Premium

Craft

$35

$40

$45


56

COMMERCIAL EXCELLENCE DRIVING IMPROVED EFFICIENCYCOMMERCIAL EXCELLENCE DRIVING IMPROVED EFFICIENCY

From To

4 regional selling organizations 2 regional selling organizations

Separate sales and marketing leads One Chief Commercial Officer

Local back office Global “one way” approach forback-office functions

Local sales autonomy and non-standard processes

Standard field sales management disciplines across the country

Supported by revenue management capability

Right sizing the business• Set ourselves up with a sustainable business model, and a competitive cost base

• Reduced headcount; bigger, fewer roles

• Standardize and simplify processes

Reducing our spend• Improve our manufacturing efficiency and productivity

• Eliminate non-working dollars

• Use global purchasing power to drive lower costs

RESETTING OUR COST BASERESETTING OUR COST BASE

Driving sustainable cost savings

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58


DRIVING SHARE

IN ABOVE PREMIUM



DELIVERING VALUE

ADDED INNOVATION

INVESTING BEHIND

CORE BRANDS

EUROPE UPDATE: MARK HUNTER, CEO EUROPEEUROPE UPDATE: MARK HUNTER, CEO EUROPE

59


EUROPE SHAPED BY STARBEV DEAL AND INTEGRATION OF UK AND IRELANDEUROPE SHAPED BY STARBEV DEAL AND INTEGRATION OF UK AND IRELAND

60

UNITED KINGDOM #2

ROMANIA #3

BULGARIA #1

HUNGARY #3CROATIA #1 MONTENEGRO #1BOSNIA &

HERZEGOVINA #1SERBIA #1

SLOVAKIA #3CZECH REPUBLIC#2

Overall MCE market share position and lead brand in each market

Molson Coors Europe was shaped by the Starbev acquisition in 2012and the integration of the UK and Ireland business with central Europe in 2013

IRELAND #3

* Non-GAAP underlying pretax income and EBITDA (Earnings before interest, taxes, depreciation and amortization) are calculated excluding special and other non-core items from U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website.

61

MOLSON COORS EUROPE IS A SCALE BUSINESSMOLSON COORS EUROPE IS A SCALE BUSINESS

($ in millions) 2013 % of Molson Coors

Market Share 21.0%

Net Sales $2,128.3 28.4%

Gross Profit $770.8 26.1%

Underlying Pretax Income* $213.3 24.6%

Underlying EBITDA* $391.1 26.6%

Europe drives 28% of MCBC sales, nearly 27% of underlying EBITDA

• Executive Leadership team changes completed

• Starbev/MCBC systems and process integration completed/on track

• Synergies ahead of plan

• UK and Ireland integration with Central Europe accelerated by 12 months

• Significant transfer of best practice taking place

• Supply Chain, Commercial, IS and HR

• Governance and cultural integration all on track

62

ACQUISITION AND INTEGRATION DELIVER ON BENEFITSACQUISITION AND INTEGRATION DELIVER ON BENEFITS

Delivering profit and share growth and margin expansion, despite difficult European trading conditions

63

POSITIVE PERFORMANCE PROGRESSPOSITIVE PERFORMANCE PROGRESS

($ in millions) Q1 2014 Q1 2013 Change

Sales Volume (000s HL) 4,085 3,868 +5.6%

Net Sales $437.6 $406.4 +7.7%

Gross Profit Margin 34.6% 30.8% 380 bp

Underlying Pre-tax Income* $16.2 $(5.3) n/a

Underlying EBITDA* $59.3 $40.0 +48.3%

* Non-GAAP underlying pretax income and EBITDA (Earnings before interest, taxes, depreciation and amortization) are calculated excluding special and other non-core items from U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website.

We have made positive performance progress, and 2014 has started strongly

64

EUROPEAN OPERATING CONTEXTEUROPEAN OPERATING CONTEXT

GDP FUTURE FORECASTS IMPROVING

INNOVATION AND CORE+/ABOVE PREMIUM ACCELERATION

ENHANCED JOINT BUSINESS PLANNING CAPABILITY

ENHANCED REVENUE MANAGEMENT CAPABILITY

SLUGGISH GDP GROWTH LEADING TO VOLATILE DEMAND

GROWTH IN VALUE SEGMENT

SHIFT TO KEY ACCOUNTS

GROWTH IN LOWER-MARGIN PACKS

The European operating context remains challenging but with a number of emerging tailwinds…


Segment UK Bulgaria Croatia Czech Hungary Montenegro Romania Serbia

Above Premium

#2 #1 #1 #5 #3 #1 #4 #1

Mainstream

#1 #1 #1 #2 #2 #1 #3 #1

Value#5 #1 #1 #3 #1 #5 #1

Note: excludes Ireland, Bosnia and Slovakia

65

MC EUROPE IS BRAND-DRIVEN, WITH BROAD AND DEEP PORTFOLIO STRENGTH…. INCLUDING PARTNER BRANDS

MC EUROPE IS BRAND-DRIVEN, WITH BROAD AND DEEP PORTFOLIO STRENGTH…. INCLUDING PARTNER BRANDS

66

OUR MC EUROPE STRATEGIC FRAMEWORK IS CLEAR AND ALIGNED WITH GLOBAL MCBC PRIORITIES

OUR MC EUROPE STRATEGIC FRAMEWORK IS CLEAR AND ALIGNED WITH GLOBAL MCBC PRIORITIES

DOUBLE ABOVE

PREMIUM

GROW CORE

BRANDSGROW TOP LINE WITH

INNOVATIONS

• One Way Approach• MC Commercial

Excellence Program• World Class Supply

Chain• Engagement and Talent

Our ambition is to be the fastest-growing beer company in Europe

CARLING HAS PERFORMED STRONGLY OVER LAST 18 MONTHSCARLING HAS PERFORMED STRONGLY OVER LAST 18 MONTHS

29%31%

32%

34%

25%

30%

35%

2012 2013 Q1'13 Q1'14

Carling Segment Market Share in the U.K.

-2%-6%

9%

1%

-5%

3%1%

13%

7%

2%

-10%

-5%

0%

5%

10%

15%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14

Mainstream Lager Carling

Carling Volume Evolution in the U.K.

67

FLAVORED EXTENSIONS

ON-TRADE FOCUS

CIDER

NEW ADVERTISING

Source: UK Industry Data

NEW ADVERTISING

ON-TRADE FOCUS

CIDER CONSUMER PROMOTIONS

68

• COMMERCIAL #1

OZUJSKO IN CROATIA DEMONSTRATES THE STRENGTH OF OUR BRAND-BUILDING CAPABILITY

OZUJSKO IN CROATIA DEMONSTRATES THE STRENGTH OF OUR BRAND-BUILDING CAPABILITY

-8%-6%

-4% -5%

3%

-7%

2% 2%

-1%

6%

-10%-8%-6%-4%-2%0%2%4%6%8%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14

Mainstream Lager Ozujsko

Ozujsko Volume Evolution in Croatia

41% 43% 42% 43%

20%

30%

40%

50%

2012 2013 Q1'13 Q1'14

Ozujsko Segment Market Share

69

NEW BOTTLE

DIGITAL BRILLIANT EXECUTION

SUPER DRY EXTENSIONNEW FLAVORS

Source: Nielsen

70

• COMMERCIAL #1


71

ABOVE-PREMIUM AND CRAFT PORTFOLIO GROWING RAPIDLYABOVE-PREMIUM AND CRAFT PORTFOLIO GROWING RAPIDLY

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2011 2012 2013

Above-Premium Beer Sales Volume in HL (000s)

+27% compound annual growth rate


72

OUR PORTFOLIO IS GROWING RAPIDLY – COORS LIGHTOUR PORTFOLIO IS GROWING RAPIDLY – COORS LIGHT

0

200

400

600

800

2011 2012 2013

Coors Light U.K. Sales Volume in HL (000s)

Coors Light has built momentum and scale in the UK, +40% CAGR


73

OUR PORTFOLIO IS GROWING RAPIDLY -- STAROPRAMENOUR PORTFOLIO IS GROWING RAPIDLY -- STAROPRAMEN

0

100

200

300

400

500

2011 2012 2013

Europe Sales Volume Outside Czech in HL (000s)

Staropramen is growing strongly outside of the Czech Republic, +22% CAGR


74

OUR PORTFOLIO IS GROWING RAPIDLY – DOOM BAROUR PORTFOLIO IS GROWING RAPIDLY – DOOM BAR

0

100

200

300

2011 2012 2013

Doom Bar growing rapidly and became #1 cask ale in the UK On trade, +22% CAGR

Sales Volume in HL (000s)


75

INNOVATION PIPELINE FROM 2012 TO 2014 HAS DRIVEN IMPROVED PORTFOLIO PERFORMANCE AND MARGIN EXPANSION

INNOVATION PIPELINE FROM 2012 TO 2014 HAS DRIVEN IMPROVED PORTFOLIO PERFORMANCE AND MARGIN EXPANSION

NEW FLAVORS FLAVORED BEERS AND COOLERS

PACKAGING INNOVATIONS

BREWERS LEMONADE CIDER SUPER DRY

On track to generate 7% of net sales from innovations


76

PERFORMANCE IS UNDERPINNED BY COMMERCIAL EXCELLENCE, WHICH IS NOW BEING LIFTED AND SHIFTED GLOBALLY

PERFORMANCE IS UNDERPINNED BY COMMERCIAL EXCELLENCE, WHICH IS NOW BEING LIFTED AND SHIFTED GLOBALLY

CONSISTENT GLOBAL FRAMEWORK

CAPABILITIES

Management and People

Global Standard Technology

Commercial Excellence Academy

ENABLERS

PILOT AREA: OUTCOMES

Field Sales Management

Revenue Management

UK: VOLUME IMPROVEMENT

CANADA: VOLUME IMPROVEMENT

+6.5% Distribution vs. Control

+18% Brilliant Execution

+6 calls/day Call Coverage

+2.2% Distribution vs. Control

+14% Brilliant Execution

+4 calls/day Call Coverage

• Acquisition and integration has gone smoothly

• Synergies ahead of plan

• UK and Ireland integration with Central Europe accelerated by 12 months

• Positive performance, 2014 started strongly

• Brand-driven business with broad and deep portfolio

• Strategic framework:

• Grow core brands

• Double above premium

• Grow top line with innovations

• Commercial Excellence

77

MOLSON COORS EUROPE DRIVING SHAREHOLDER VALUEMOLSON COORS EUROPE DRIVING SHAREHOLDER VALUE

Ambition: To be the fastest growing beer company in Europe

78

FINANCIAL UPDATE: GAVIN HATTERSLEY, CFOMOLSON COORS BREWING COMPANY

FINANCIAL UPDATE: GAVIN HATTERSLEY, CFOMOLSON COORS BREWING COMPANY

• Investing behind core brands• Driving share in above premium • Delivering value-added innovation• Commercial excellence• Cost reductions


• Capital expenditure driving efficiencies• Working capital improvements

CASHGENERATION



79

DRIVING TOTAL SHAREHOLDER RETURN WITH PACC MODELDRIVING TOTAL SHAREHOLDER RETURN WITH PACC MODEL

ProfitAfter

CapitalCharge

(TSR)TOTAL

SHAREHOLDER RETURN

$441

$541

$646 $642 $719

$794 $821 $865 $865

$55 $107

$0

$200

$400

$600

$800

2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1'13 Q1'14

($m

illio

ns)

MCBC Underlying Pretax Income (*)

80

UNDERLYING EARNINGS GROWTH IN TOUGH TIMES…UNDERLYING EARNINGS GROWTH IN TOUGH TIMES…

* Non-GAAP underlying pretax income is calculated by excluding special and other non-core items from the nearest U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website.

Pretax income growth over the past 8 years totaled 96%

$1,106 $1,100 $1,091 $1,127 $1,212 $1,267

$1,398 $1,469

$209 $251

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2006 2007 2008 2009 2010 2011 2012 2013 Q1'13 Q1'14

($m

illio

ns)

Underlying EBITDA1

81

…AND STEADY, STRONG, GROWING EBITDA…AND STEADY, STRONG, GROWING EBITDA

1 Non-GAAP underlying EBITDA (Earnings before interest, taxes, depreciation and amortization) is calculated excluding special and other non-core items from U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website. Includes 42% of MillerCoors.

2013: +5.1%, to nearly $8 per share; 2014 1st Q: +20.4%

$0.64 $0.64 $0.76

$0.92

$1.08

$1.24 $1.28 $1.28

$1.48

$0.00

$0.50

$1.00

$1.50

2006 2007 2008 2009 2010 2011 2012 2013 2014E

(div

iden

d pe

r sha

re)

Dividends Paid (Annual Per Share)

82

GROWING CASH RETURNS VIA DIVIDENDSGROWING CASH RETURNS VIA DIVIDENDS

New dividend payout ratio of 18%-22% of trailing underlying EBITDA


$81 $185

$331 $442

$657

$851 $958

$1,078 $1,195

$0

$200

$400

$600

$800

$1,000

$1,200

2005 2006 2007 2008 2009 2010 2011 2012 2013

($m

illio

ns)

Cumulative Annualized Cost Savings (*)

83

COST REDUCTIONS HELP TO DRIVE TOP LINE AND BOTTOM LINECOST REDUCTIONS HELP TO DRIVE TOP LINE AND BOTTOM LINE

* Including 42% of MillerCoors cost savings

Nearly $1.2 billion of cost savings delivered in past 9 years


84

ONGOING COST EFFICIENCIES WILL FUEL GROWTH INVESTMENTSONGOING COST EFFICIENCIES WILL FUEL GROWTH INVESTMENTS

Long-term sustainability

• Captured more than $70 million of savings in 2013*

• Savings of $40-$60 million/year for at least the next 4 years*

• Near the high end of the range for the next 1-2 years

• Includes Central Europe deal synergies

Driven through: efficiency and effectiveness

• Restructuring U.K., Canada, International

• Reduced overhead expenses, primarily Canada

• Global procurement

* Excludes MillerCoors cost savings.

Substantial % of savings reinvested for profitable growth

CASH AND CAPITALBRAND-LED PROFIT GROWTH CASH GENERATION

Capital Spending• 2014 outlook: $330 million*

• Supply chain work in Canada

• Innovation in Canada and Europe

• Higher than maintenance capital

• Expect to maintain similar capital spend levels in 2015

Maintaining working capital improvements• Accounts payable

• Accounts receivable

• Inventories

85

CAPITAL EFFICIENCY DRIVES CASH AND VALUECAPITAL EFFICIENCY DRIVES CASH AND VALUE

* Excludes MillerCoors capital spending

PACC drives focus on cash and capital efficiency


INCREASING WORKING CAPITAL EFFICIENCYINCREASING WORKING CAPITAL EFFICIENCY

62

52

45

50

55

60

65

2012 2013

Day Sales Outstanding

86

19

-4

-10-505

101520

2012 2013

Cash Conversion Cycle (*)

76

86

70

75

80

85

90

2012 2013

Days Payables Outstanding

33

29

26

28

30

32

34

2012 2013

Days Inventory Outstanding

* Note: Cash Conversion Cycle = DSO+DIO-DPO Totals may not sum due to rounding

Driving future improvements, including in supply chain financing


PROFIT, CAPITAL EFFICIENCY & STRUCTURE DRIVE CASH FLOWPROFIT, CAPITAL EFFICIENCY & STRUCTURE DRIVE CASH FLOW

$426

$315

$508

$681

$887

$618

$865 $892

$700

$0

$200

$400

$600

$800

$1,000

2006 2007 2008 2009 2010 2011 2012 2013 2014E (1)

($m

illio

ns)

MCBC Underlying Free Cash Flow (*)

87

* Underlying free cash flow is defined as operating cash flow, less capital spending, plus or minus investing cash from/to MillerCoors and plus or minus the cash impact of special and other non-core items. See reconciliation to nearest U.S. GAAP measures on our website. (1) Forecast, plus or minus 10%.

Very cash generative business, even after substantial investments in brands, etc.

CASH GENERATIONBRAND-LED PROFIT GROWTH CASH AND CAPITAL

SHORT-TERM CASH USE PRIORITY: DELEVERAGESHORT-TERM CASH USE PRIORITY: DELEVERAGE

2.8x3.0x 3.0x

3.6x

2.8x 2.9x

4.4x

3.2x

2.9x

1.8x 1.6x1.4x

0.8x 0.6x0.7x

2.8x

0x

1x

2x

3x

4x

5x

2006 2007 2008 2009 2010 2011 2012Pro Forma

2013 2015Goal

S&P Adjusted Debt / EBITDA Net debt to EBITDA

<2x

2.3x

(1)

88

(1) Total debt less cash, divided by the sum of underlying pretax income, plus interest and depreciation & amortization expense (incl. 42% of MillerCoors). See reconciliations to nearest US GAAP measures on our website.

CASH GENERATIONBRAND-LED PROFIT GROWTH CASH AND CAPITAL

89

KEY VALUE DRIVER: DISCIPLINED CASH USEKEY VALUE DRIVER: DISCIPLINED CASH USE

Cash use priorities

• Strengthen balance sheet by reducing liabilities

• Return cash to shareholders

• Brand-led growth opportunities

Short-term focus: Balance sheet, especially debt (to pre-Central Europe levels)

• 16% increase in dividend 1st Q 2014

• New payout ratio: 18-22% of trailing year EBITDA

• Share buy-backs can be considered after deleverage

Consistent return-driven criteria

• Short-term earnings accretion

• ROIC/WACC within 3-5 years


CASHGENERATION


STRONG BASE, DRIVING TSRSTRONG BASE, DRIVING TSR

90

Strategy, PACC Model Drive Value, Alignment2013 Results: • Achieved higher underlying

pretax and EPS

• Grew underlying EBITDA

• Exceeded cost savings targets

• Improved cash conversion cycle

• Generated nearly $900 million in underlying free cash flow

• Paid down more than $800 million in debt and cross-currency swaps

Strategy working, committed to PACC

91

PETER SWINBURN, PRESIDENT & CEO MOLSON COORS BREWING COMPANYPETER SWINBURN, PRESIDENT & CEO MOLSON COORS BREWING COMPANY

• The fundamentals of our business are strong and improving

• We have a disciplined growth strategy that is yielding improved financial results

• We have a strong team that has consistently delivered on its promises

• Molson Coors is well positioned to grow as economic conditions continue to improve

92

MOLSON COORS IS WELL POSITIONED TO GROWMOLSON COORS IS WELL POSITIONED TO GROW

M O L S O N C O O R S B R E W I N G C O M PA N Y A N N U A L N E W Y O R K I N V E S T O R / A N A LY S T M E E T I N G

J U N E 2 5 , 2 0 1 4

93

molson coors brewing company annual new york … · 5 strong performance during tough times •...

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