Molson Coors Brewing Co.'s net income fell 21 percent in the first quarter, due largely to higher costs for ingredients and fuel.
This is typically the weakest quarter for the brewer. But Molson Coors also suffered by comparison to the prior year, which included a sales boost from the Vancouver Olympics.
Molson Coors earned $82.9 million, or 44 cents per share, in the quarter that ended March 26. That is down from $104.6 million, or 56 cents per share, last year. After adjusting for special items, the company earned 43 cents per share.
Revenue rose 4 percent to $690.4 million.
The results fell just short of Wall Street's expectations, and the company's shares fell in trading Tuesday. Analysts expected earnings of 44 cents per share on revenue of $690.5 million, according to data from FactSet.
Molson Coors, like most brewers, is struggling with softer beer sales as consumers cope with unemployment and a tough economy. It is particularly pronounced for Molson Coors, whose core customers, men under 28, are seeing particularly high unemployment.
The company's total worldwide beer volume fell 1.5 percent from the previous year.
Molson was helped by MillerCoors, the joint venture with SABMiller PLC that sells both companies' brands in the U.S., during the period.
MillerCoors' revenue was virtually flat, but it increased net income by about 12 percent with cost-cutting and new marketing campaigns that encouraged drinkers to trade up to higher-priced brands like Blue Moon and Leinenkugel.
While the bulk of its business is in established markets such as the U.S., United Kingdom and Canada, the company is looking to new markets such as Russia, China and Vietnam to help drive growth.
The problems from softer sales are compounded by higher fuel, freight and ingredient costs that are challenging the profitability of nearly all consumer product companies.
Molson Coors CEO Peter Swinburn said the company was able to gain market share, improve its margins and price. But given the economic conditions, any recovery in sales volume is likely to be gradual.
"The fundamentals are there," Swinburn said. "What we can't control is the economy."
Shares of the company fell $2.15, more than 4 percent, to $46.25 in midday trading.