By Granth Vanaik
(Reuters) -Molson Coors surpassed Wall Street estimates for first-quarter sales and profit on Tuesday, helped by higher prices and steady demand for brands such as Coors Light and Miller Lite.
However, the company took a more cautious stance on the industry outlook and reaffirmed its full-year sales and profit forecasts, sending its shares down 7.6%.
WHY IS IT IMPORTANT?
Beer makers such as Molson Coors (NYSE:TAP) and peer Constellation Brands (NYSE:STZ) have been consistently hiking prices to protect their margin from rising costs of production, even as some of those expenses are beginning to drop from
CONTEXT
Consumers have been willing to stretch their budgets a little more to purchase Molson's products given that beers are generally considered as recession-proof.
In February, the company said it was expecting to gain more shelf space at retailers going in to the spring.
MARKET REACTION
Shares dropped as much as 8.2% to $58.30 on Tuesday, hitting an over five-month low.
KEY QUOTES
"We believe commentary on depletion trends in April and Q2 will be key in driving the stock reaction, given the recent slowdown in scanner data with volumes down mid-single digit percentage in the last few weeks," said Citi Research analyst Filippo Falorni.
"Molson Coors appears to be losing some market share in April," wrote Roth MKM analyst Bill Kirk in a note.
BY THE NUMBERS
Its net sales for the quarter was about $2.60 billion, ahead of analysts' average estimate of $2.50 billion, according to LSEG data.
The company posted an adjusted profit of 95 cents per share, beating expectations of 74 cents.
Brand volumes in the Americas segment increased 5.3% in the first quarter, including a 5.8% increase in the U.S.