Molson Coors Brewing shares tumbled on Tuesday after the beer maker said it had understated deferred tax liabilities by $247 million due to accounting errors.
In a regulatory filing, Molson disclosed that it made incorrect deferred income tax calculations arising from its acquisition of SAB Miller’s 58% interest in the MillerCoors joint venture in 2016.
As a result, the filing said, the company is restating its 2016 financial statements to show a $399 million increase in deferred tax liabilities and restating its 2017 statements to reflect a $151 million decrease in those liabilities.
“These adjustments resulted in an aggregate $247.7 million increase to the company’s deferred tax liabilities and corresponding decrease in retained earnings and total equity as of December 31, 2017,” Molson said.
In trading Tuesday, Molson shares dipped 8.9% to $59.55 as the company also announced disappointing quarterly sales. For the fourth quarter, sales fell 6.2% to $2.42 billion, missing analysts’ estimate of $2.54 billion, with U.S. sales declining 7% to $1.6 billion due to lower volumes in the premium light segment.
“While the restatement of results for 2016 and 2017 will not have a material impact on the company, it’s one more headache for the maker of Blue Moon, Milwaukee’s Best, and Miller Genuine Draft as it struggles to right sales in the challenging U.S. market,” Food Dive said.
According to Food Dive, Molson’s introduction of new products, including low-calorie options, and its push to expand into alternative beverages like hard cider and cannibis-infused drinks have not been enough to offset the U.S. sales drop.
“We accomplished much in 2018,” Molson CEO Mark Hunter said in the earnings release, noting that the company had, restored underlying EBITDA growth in the quarter and second half, launched the Truss cannabis beverage joint venture in Canada, and continued to strengthen its European business.
Molson also said in its regulatory filing that it had found a material weakness in its internal controls over financial reporting relating to the design of appropriate controls to identify and reconcile deferred income taxes associated with the accounting for acquired partnership interests.