Molson Coors (TAP; Baa2 Pos/BBB) 2Q (to June) Results

US looks weak - which is where TAP is focused on - and may be keeping the FY EBT guidance unch. 1H EBT was +20% and taking circa 7.5% yoy growth for FY, its implying 2H to move -2% lower yoy. No firm view on new 32s levels/looks fair here. Equities +2% in pre-market.

• 2Q sales at $3.3b (-0.1%) driven by volume (-4.1%) and offset well by strong pricing/mix (+4%). adj. EBT was at $531 (+5.2%) on a 16% margin (+100bps).
• Americas (80% of sales) fell -1.5% (V -5.6%, price/mix +4.1%) while EMEA & APAC (20%) offset it on +6.1% growth (V +0.3%, p/m +5.8%). Americas runs a 19% margin vs. EMEA/APAC 12%. Pricing growth in EMEA/APAC is on back of premiumization strategy; when it came to issue it said it was targeting growing premium from 27% to 33% of revenues. Margins are not reflective of premium (AB-Inbev & Spirits >10tpps higher).
• FCF of $505m over the 1H is down $65m from last year which it says is on higher capex. Equity pay-outs totalled $564m ($375m in buybacks, $188m in dividends).
• Gross debt at $7.1b and net of the $1.65b in cash left it net 2.1x levered (down from 2.5x last year).
• FY guidance unch; cc sales growth in LSD, EBT with MSD growth, Capex of $750m (+/-5%) & FCF of $1.2b (+/- 10%). Consensus is in-line on FCF but is well shy on EBT seeing only +2% growth.