Molson Coors Volume Slide Deepens as Costs Escalate
Molson Coors Beverage (TAP-A) reported second-quarter net sales fell 3.3% to $3.10 billion as volume declined 5.4% and mark-to-market commodity losses cut into profit.
Molson Coors Beverage (TAP-A) reported second-quarter net sales of $3,096.5 million, down 3.3% from $3,200.8 million a year earlier and down 3.6% in constant currency, as a 5.4% drop in financial volume outweighed favorable pricing and mix. The brewer, whose portfolio spans Coors, Miller and a growing lineup of non-beer brands, said financial volume fell to 19.734 million hectoliters from 20.870 million, with brand volume down 4.8%.
The volume decline was steeper in the company's core Americas segment, where financial volume fell 6.4% and brand volume fell 5.3%, compared with declines of 2.8% and 3.4%, respectively, in EMEA&APAC. Even as volumes contracted, net sales per hectoliter rose 2.3% on a reported basis and 2.0% in constant currency, reflecting continued pricing and premiumization gains that partially cushioned the top line.
Profitability deteriorated more sharply than revenue. U.S. GAAP income before income taxes fell 49.0% to $283.1 million, while underlying income before income taxes, which excludes one-time items, fell 27.8% in constant currency to $383.2 million. The gap between the two measures was driven largely by $98.0 million of unfavorable mark-to-market commodity derivative changes that are excluded from underlying results. Diluted GAAP earnings per share fell 42.3% to $1.23, while underlying EPS fell 22.9% to $1.58, with both figures cushioned somewhat by a lower share count from buybacks.
Cost of goods sold per hectoliter rose 12.1% on a reported basis and 6.3% in underlying constant currency terms, reflecting the commodity derivative swings alongside roughly $40 million of unfavorable Midwest Premium pricing impact and broader cost inflation, partially offset by savings initiatives. Marketing, general and administrative expense rose 3.7% reported, or 3.2% in underlying constant currency, as the company cycled lower prior-year incentive compensation and absorbed new ERP implementation costs.
Segment results diverged. Americas segment income before taxes fell 27.5% reported to $390.1 million from $538.2 million, pressured further by restructuring charges and accelerated amortization of a brand intangible tied to a decision to exit a brand in that segment. EMEA&APAC fared worse: segment income before taxes dropped 41.5% reported in the quarter, and the segment swung to a six-month loss of $13.8 million from a $45.6 million profit a year earlier, driven by unfavorable channel mix and softer volume in the U.K.. Against that backdrop, the company pointed to early traction from its Monaco Cocktails acquisition, which delivered strong performance in its first quarter under the Molson Coors umbrella, and continued momentum in its Fever-Tree partnership.
Molson Coors used the quarter to reshape its balance sheet, repaying $2.0 billion of 3.0% senior notes with proceeds from a May 27, 2026 issuance of $500 million of notes due 2031 and $1.0 billion due 2036, plus cash on hand. Even so, net debt to underlying EBITDA rose to 2.53 times as of June 30, 2026, from 2.41 times a year earlier. Six-month operating cash flow improved by $192.8 million to $820.4 million, and underlying free cash flow rose $220.3 million to $513.8 million, helped by a $107.5 million cash settlement of interest rate swaps and the absence of a prior-year $60.6 million Keystone litigation payment. Capital returned to shareholders declined over the same period, with dividends paid falling to $183.7 million from $192.7 million and share repurchases falling to $211.0 million from $306.8 million.
The company reaffirmed its full-year 2026 guidance: net sales flat within a range of plus or minus 1% in constant currency, underlying pretax income down 15% to 18% in constant currency, underlying EPS down 11% to 15%, capital expenditures of $650 million plus or minus 5%, and underlying free cash flow of $1.1 billion plus or minus 10%. The full-year impact of Midwest Premium pricing is now expected to exceed approximately $130 million, up from roughly $40 million already realized in the second quarter alone, signaling a heavier cost burden in the back half of the year.