Molson Coors (TAP) Q2 EPS Jumps 12%

Molson Coors Beverage (TAP 1.25%), the global brewer behind brands like Coors Light, Miller Lite, and Blue Moon, released its Q2 2025 earnings results on August 5, 2025. The company reported non-GAAP earnings per share (EPS) of $2.05, well above the $1.82 analyst consensus (non-GAAP). Reported revenue (GAAP) reached $3,200.8 million, topping GAAP expectations by $113.1 million. However, net sales (GAAP) fell by 1.6% from the prior year period, and Underlying (Non-GAAP) business trends showed declines in volume. Management responded by cutting its full-year 2025 outlook for net sales (on a constant currency basis) and underlying (Non-GAAP) income before income taxes, citing weaker industry demand, increased competition, and persistently high input costs. Overall, the quarter demonstrated cost discipline and improved sales mix, but fundamental industry and company-specific headwinds became more visible.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Company Overview and Key Focus Areas

Molson Coors Beverage operates as one of the world's largest beer and beverage companies. Its portfolio includes familiar beer brands as well as premium, non-alcoholic, and spirits-based drinks. The business spans North America, Europe, and Asia-Pacific, giving it broad geographic reach and a diverse market presence. Its extensive brand lineup is central to competing in both established and emerging beverage segments.

In recent periods, the company has focused on a strategy known as “premiumization”—an effort to grow sales of higher-end products and expand into new drink categories. Molson Coors aims for one-third of its global portfolio to consist of above-premium brands. It continues to diversify into areas like ready-to-drink cocktails and non-alcoholic beverages to match changing consumer demands. Key to its strategy are investments in innovation, brand support, and targeted geographic expansion.

Quarter Review: Financial and Commercial Developments

The latest quarter showed mixed performance. Both revenue (GAAP net sales) and brand volumes fell compared to the prior year, with Consolidated financial volume slipped 7.0%. Brand volume—in other words, the company’s total sales of its own branded beverages—fell 5.1%. Despite these declines, Molson Coors managed to beat profit expectations, reporting underlying (Non-GAAP) diluted EPS of $2.05, exceeding the analysts' estimate of $1.82, thanks to pricing and cost controls. EPS (earnings per share) topped consensus by over 12% on a non-GAAP basis. Management attributed the surprise to improved price realization, a stronger sales mix, lower marketing and administrative spending, and favorable shipping timing.

Gross margin, which measures profits after production costs, came under pressure. Cost of goods sold increased 7.3% per hectoliter on a reported (GAAP) basis, due in part to inflation in materials and manufacturing, as well as lower production volumes. Management cut marketing, general, and administrative expenses by about 4.9% on a reported (GAAP) basis compared to the prior year, which helped offset rising production costs. However, Underlying (non-GAAP) income before income taxes declined slightly by 0.8% in constant currency.

In the Americas segment, revenue (GAAP) was down 2.8% with financial volume declined 6.6%. The drop in financial volume included an approximate 3% impact from lower contract brewing volume related to the exit of contract brewing arrangements. The segment nevertheless grew underlying (non-GAAP) income before income taxes by 5.4% year over year in constant currency, as gains in pricing, product mix, and tighter cost controls outweighed revenue losses. A 4.2% increase in net sales per hectoliter (GAAP) reflected higher average pricing per unit sold. In Europe, Middle East, Africa, and Asia-Pacific (EMEA & APAC), revenue rose 3.0% on a reported (GAAP) basis, driven by favorable price and sales mix and favorable foreign currency impacts. In constant currency, revenue for the EMEA&APAC segment declined by 2.3%. Financial volume dropped 7.8%, but price/mix improvements pushed up net sales per hectoliter by 11.8% reported. Underlying income before income taxes for the segment fell 17.9% as higher waste management fees, related to new U.K. regulations, squeezed margins.

Premiumization efforts continued to advance. Non-alcoholic and wellness-focused drinks also received new investments. Innovations such as Blue Moon non-alcoholic beer, higher-alcohol Blue Moon, and U.S. distribution growth for the Fever-Tree mixer brand aimed to meet evolving consumer preferences. Management emphasized its ongoing goal of expanding the share of above-premium beverages in its portfolio.

The period saw capital returns to shareholders remain strong. Molson Coors paid $192.7 million in dividends and repurchased $306.8 million in shares during the first half of 2025. The Q1 2025 dividend rose 6.8% to $0.47 per share, marking the fourth consecutive year of dividend increases as of Q1 2025. The company ended Q2 2025 with a net debt to underlying (non-GAAP) EBITDA ratio of 2.41x

On the product side, power brands such as Coors Light, Miller Lite, and Coors Banquet retained most of the volume share gains achieved in prior periods, specifically over the last three years. Banquet, in particular, maintained momentum in Q1 2025, while Blue Moon saw a temporary sales dip due to a packaging change but is expected to recover as new marketing and distribution efforts ramp up. The Fever-Tree partnership brought new growth potential to the non-alcoholic lineup, and the business continued to scale additional beverage types and flavors for both health and indulgence segments.

Looking Forward: Guidance and Investor Considerations

Molson Coors sharply revised its outlook for FY2025, lowering its guidance for net sales, underlying (non-GAAP) income before income taxes, and underlying (non-GAAP) diluted earnings per share. Leadership now expects revenue (net sales, constant currency) and underlying (non-GAAP) income before income taxes to decline more than previously planned for full year 2025, reflecting a beer market that remains weak in the U.S. and parts of Europe, as well as high input costs (notably, indirect aluminum costs from tariffs known as the Midwest Premium). The company forecasts FY2025 constant currency net sales to decline 3–4% and anticipates underlying (non-GAAP) income before income taxes to decline 12–15% for the full year. Prior guidance anticipated only a low single-digit decrease for both metrics on a constant currency basis. Underlying (non-GAAP) EPS is now expected to drop 7–10%, compared to the earlier view of low single-digit growth (underlying (non-GAAP) diluted earnings per share, 2025 guidance). Underlying (non-GAAP) free cash flow guidance held steady at $1.3 billion, plus or minus 10%.

Key watch points for the coming months will be the pace of industry volume stabilization, further progress on premiumization goals, as competitive activity remains elevated in major markets, and future performance will depend on maintaining pricing discipline, strengthening the product mix, and successfully launching or supporting premium and non-alcoholic brands. The quarterly dividend was raised 6.8% to $0.47 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.