America’s Beer Industry
1. Industry Overview
Our industry of choice is the beer and cider industry in the
USA. We chose this industry due to its unique factors -
namely that it was largely not subject to current trends
given its overall demand has been relatively consistent
over the past 20 years. Rather, we see trends within it,
with cider demand skyrocketing 3 years ago, before the
recent shift to craft breweries. Moreover, the latest major
mergers and acquisitions within the industry has a
resulted in a very happening industry; with the latest
major acquisition of MillerCoors, now is a more apt time
than ever to analyze this exciting area.
In particular, we will be focusing on 3 of the top
companies - Constellation Brands, Molson Coors Brewing
Company, and Diageo.
Constellation Brands (STZ)
Constellation brands was established in 1945 in New
York. Since then, the company has grown through internal
expansion and acquisitions across all segments of the
beverage alcohol industry and the company now owns
more than 100 brands in wine, beer and spirits. The
company is large player in the beer and wine industry,
being the largest beer import company of all major beer
suppliers. It is also the largest wine producer in the world.
Molson Coors Brewing Company (TAP)
Originally having its brewing roots from England, Molson
was first founded as a Canadian company while Coors as
a US company. The merger took place in 2005 which has
led to its expansion to become one of the world’s top
brewers by volume. It further expanded after acquiring
MillerCoors, following the merger of Anheuser-Busch
InBev and SABMiller. As of present, it remains specialised
to produce solely beer and is currently the world’s largest
brewer by volume
Diageo (DEO)
Formed in 1997 from the merger of Guinness and Grand
Metropolitan, Diageo is a multinational alcoholic
beverages company and the world’s largest producer of
spirits and beer. DEO largely specializes in hard liquor,
and their brand include the world’s best selling vodka
(Smirnoff), Scotch whisky (Johnnie Walker), liqueur
(Baileys), and Guinness (stout). Although headquartered
in London with a primary listing on LSE, it has a
secondary listing on NYSE, DEO, which we will be
comparing with STZ and TAP.
A quick comparison of each company shows the
following:


2. PESTLE Analysis
Political
Through a Political Action Committee, TAP informs public
policy makers on practices to promote corporate
responsibility in promoting and consuming alcoholic
products. STZ faces political risk where speculations on
Trump’s preference to tear up the NAFTA have resulted in
its stock prices to fall by 8%. For DEO, the interstate
political deal signed with the United States Virgin Island
government in 2008 provides Diageo with nearly $3 billion
in tax breaks over the next 30 years.
Economics
The three companies are largely affected by the supply
and demand of the products. One of the key ingredients of
beer is hops, which had its global price almost tripled since
2012, hence raising the cost price significantly.
Furthermore, there has been an increasing trend towards
low-strength alcohols drinks arising from greater
proportions of women consumers and first-time drinkers.
Another example is the change in trends towards craft-
beers which has naturally affected mass-producing beer
companies.
Social
In October 2012, TAP joined 12 leading alcohol companies
to strengthen efforts to reduce harmful drinking around the
world. They took part in the launch of
ResponsibleDrinking.org in May 2015 to advise drinkers
on responsible drinking. Similarly, STZ is a member of
Techniques for Effective Alcohol Management (TEAM) that
promotes responsible drinking and positive fan behaviour
at sports and entertainment facilities. It is also involved in
a U.S. nation campaign, ‘We Dont Serve Teens’ to prevent
underage drinking. For DEO, it has included in its new
2020 target report its emphasis to create a positive role of
alcohol in society through partnerships and programmes.
 America’s Beer Industry

Technological 3. Fundamentals Analysis

TAP utilises technology in the production line. It Stock Price Analysis

innovated a new printing technology technique which
uses ultra-violet light to cure the print in 2008, instead of
the traditional gas firing technique. This allowed efficient
cost saving. Instead, STZ applied technology towards
their marketing and branding through their mobile phone
application, ‘Hello Vino’, catering to wine consumers, with
a possible expansion into beer consumers. In contrast,
DEO applies innovation and technology towards social
responsibility where it launched a global innovation
programme with emerging technology companies to help
consumers to drink responsibly.

Environmental

TAP has been occasionally under the radar for its

pollution caused to the environment. This is in contrast to
STZ which shows almost no record of violation of
pollution laws. Nevertheless, TAP has done its part by
cutting down waste in resources, its new ultra-violet light
printing technology, as earlier mentioned, is cleaner.
However, DEO still ranks to top polluter out of these
three companies with supposedly some of the highest
emissions in some industrial sites in Scotland.
Legal
Looking at the cumulative changes in stock price among
all 3 companies, we see that DEO has been relatively
stable throughout 2016. Conversely, TAP, while originally
slightly deflating, started rising rapidly from April onwards,
and overtook DEO to peak in October. This is likely
attributed to the huge merger that occurred in the
company.

Generally all three companies have been involved in
lawsuits for differing extents of fraudulent activity. Such
examples include Molson Coors being sued in 2015 for
misrepresenting their the mass-produced Blue Moon
wheat ale to be craft beer. Constellation Brands was
sued in 2010 for its sale of fraudulent Pinot Noir in the
United States from a French Supplier. Diageo was sued
in 2015 for artificially boosting sale figures by shipping
excess inventory to distributors. Overall, these lawsuits
for such fraudulent acts have negatively affected both
share prices as well as the trust and prospective
transactions from their business partners.
Previously, TAP and SABMiller had a joint venture,
MillerCoors. However, in April, there was news of a
possible merger between SABMiller and Anheuser InBev,
2 of the largest industry players. This sent TAP’s price
rocketing as it was expected that it would gain majority of
MillerCoors. Indeed, when the merger was finalized in
October, they acquired 58% of MillerCoors, TAP reached
its peak price.
Similarly, we also see that STZ stock price has been
steadily growing. This can be attributed to its various
acquisitions and joint ventures, such as its successful



 America’s Beer Industry
Revenue Analysis 

Notably, we see a sharp rise in STZ’s revenue,
particularly in the years of 2014 and and 2015, at 74.08%
and 23.84% respectively. This can be attributed to STZ’s
$5.2 billion purchase of Mexican beer brewer Groupo
Modelo’s brands in the US in 2013, which includes
popular beer brands Corona and Modelo, 2 of the top 15
selling beer brands in the US. Indeed, the acquisition
contributed to $598m and $941m in 2014 and 2015
respectively, and net sales for STZ’s beer segment has
consistently been rising in the double-digits over all 3
years.
Conversely, TAP suffered a decline in revenue in 2014
and 2015. This can largely be attributed to weaker beer
volumes, unfavourable currency rates, and a lost
contract. Nevertheless, once TAP started acquiring and
shifting their focus towards craft breweries, it managed to
recover with a strong rise in revenue in 2016 at 36.93%.
Its US joint venture, MillerCoors, succeeded in stemming
volume declines of its beers for the first time since 2008,
not to mention the rising sales volume of its beers in
Europe.
On the other hand, DEO has been facing rapid declines
in revenue as we see a shift in consumer preference from
hard liquor such as scotch and vodka to craft beers. This
is compounded by the “anti-extravagance” measures in
China as the government clamps down on official gift-
giving, which drove down sales of Cognac and Whisky.
Income Analysis
The changes in income in all 3 companies have relatively
been in sync with the changes in revenue, hence
supporting the notion that these changes have largely
been revenue-driven. However, we see a sharp drop in
STZ’s income in 2015 despite an increased revenue for
that financial year. This is largely due to the sharp spike in
income in the previous financial year of 2014, which
included a $1.6 billion non-cash gain on the re-
measurement to fair value of the company’s original 50%
interest in the Crown Imports joint venture as a result of
the beer business acquisition - a one-off gain. Moreover,
this may also be partially attributed to the unusual expense
items in FY2015, which included integration and other
acquisition associated with the beer business acquisition,
as well as a net loss from the mark to fair value of
undesignated commodity derivative contracts, primarily
driven by diesel fuel.
Adjustments to TAP
Most notably, we see a huge spike in TAP’s income in
2016 at 449.62%. On further analysis, this is due to a $2.5
billion revaluation gain related to the fair value
remeasurement of their pre-existing 42% interest in
MillerCoors over its carrying value. Hence, on the
assumption that tax % over the total income from
continuing operations remains constant, we re-adjusted
the profits to get $325.7 million. We will be presenting both
the adjusted and unadjusted figure for our analysis on the
TAP’s financial health. While the other companies also
have extraordinary income reflected in their financial
statements for 2016, we have not taken those into account
they are insignificant compared to TAP’s $2.5 billion gain.
 America’s Beer Industry
4. Market Valuation
Price to Sales Ratio
The price-to-sales (P/S) ratio is an indicator of the value
placed on each dollar of a company’s sales or revenues.
Using relative valuation, the P/S ratios indicate that STZ
appears to be the most undervalued among its rivals. STZ
sits at a 2016 trailing ratio of 4.4x, in comparison to TAP’s
5.8x and DEO’s 5.04x. In other words, the market places a
significantly lower value on each dollar of STZ’s revenue in
comparison to TAP and DEO, and we see this consistent
trend throughout the years.
Analysing the most recent P/S ratio in 2016, STZ is the
most undervalued despite being the company that have
seen increase in revenue while TAP and DEO is
overvalued when their revenue has seen a decrease. With
revenues continuously increasing year on year, it gives
confidence to investors on STZ’s continuous growth
potential. This is why STZ’s shares is projected to see
growth and is undervalued. Using semi-strong form
hypothesis, DEO’s and TAP’s stock price is overvalued due
to their expansion plans with Whisky, as well as
expansions into craft brewery and structure reforms
respectively. All these strategies and plans are very
uncertain and have very little prior basis for predictions,
which will dampen investors’ confidence and return on
investment.
That being said, turnover is only valuable if it can be
translated into earnings. Although the price multiple P/S
ratio indicates STZ as the most undervalued stock, it is
difficult to ascertain purely based on the P/S ratios as to
which is the best investment choice. Other criteria such as
high profit margin, low debt level & growth prospects are
equally relevant. Given that all 3 companies have positive
earnings over the 3 periods, P/E ratios will be a better price
multiple to study in determining the relative valuation of a
company.

 Ratio
Price to Earnings
Comparing between the three companies, the outlook for
TAP is the most positive for investors as they are
expecting higher earnings growth with a higher P/E ratio
as compared to STZ and DEO. This positive outlook is
further reinforced by TAP having the lowest D/E ratio,
which means the lowest risk as their financial leverage is
the least and will not skew the P/E ratio. Nonetheless, with
DEO’s P/E ratio gradually increasing and matching STZ’s,
investors confidence and expectations in DEO is also
increasing and can have a healthy return on investment on
the caveat that their expansion plans focusing on Whisky
is not a flop. The decrease of TAP and STZ’s P/E ratio can
be attributed to their aggressive acquisition of smaller
breweries to capture a larger market share, which
increases their liabilities and especially for STZ, their D/E
ratio, affecting their attractiveness to investors.
Previously, looking at the P/S ratios, it seemed that DEO
was overvalued by the market, at a trailing P/S ratio of
5.04x in 2016. Contrastingly however, the P/E ratios
indicate that DEO is actually undervalued at 23.31x,
relative to STZ and TAP’s ratios of 26.4 and 35.7x
respectively.
Price to Book Ratio
Using relative valuation based on the price to book (P/B)
ratio, both TAP and STZ seems undervalued relative to
DEO (with TAP being more significantly undervalued).
DEO’s 6.2x ratio is almost 3 times that of TAP’s at 2.1x.
Upon closer analysis, it is revealed that DEO’s unusually
large P/B ratio is a result of its excessive leveraging in the
last 3 years and resulted in a significantly lower book
value. 

Studying the P/B ratios of the 3 companies, we note that
TAP and STZ both appear to be good investment choices
given their relatively undervalued stock position in the beer
and ciders industry compared to DEO.
 America’s Beer Industry

5. Financial Health Evaluation Debt to Equity

Liquidity

TAP has the lowest average D/E ratio (3 year average of

A high current ratio indicates a company’s likely ability to
pay back its current liabilities. As of 2016, both DEO and
STZ have healthy current ratios of 1.43 and 1.31
respectively. However, TAP has a theoretically unhealthy
ratio of 0.69. A further analysis shows that this low current
ratio was possibly attributed by the overall increase in
accounts payable and other current liabilities, which arose
as a result of the consolidation of MillerCoors’ current
liabilities, partially offset by an increase in cash balances
and accounts receivables received from the consolidation.
Moreover, there has been an increase in the current
portion of long-term debt and short-term borrowings (from
$28.7m in FY15 to $684.48m in FY16) due to their $300
million 2.0% notes and CAD 500 million 3.95% notes
maturing in 2017.
0.62) as compared to STZ (3 year average of 1.29) and
DEO (3 year average of 0.79). The ratios can be
compared directly as all competitors are within the same
industry and have similar operations. On deeper analysis,
STZ and DEO have been actively acquiring popular craft
breweries by using investors’ money, accounting for high
D/E ratio. Yet, over the years, their D/E ratio can be seen
to have been dropping steadily as their operations
stabilised, are able to finance their debts and they grew
more profitable. Contrarily, TAP only recently begun
actively acquiring craft breweries in response to popular
consumer preferences. This particular acquiring phase
explains why their D/E ratio is steadily increasing instead;
indeed, their recent acquisition of MillerCoors resulted in
large liabilities. Overall, the D/E ratio trends evidences
TAP’s late response to consumer trends comparative to
STZ and DEO.
Cash Coverage

Inventory Turnover Ratio

While all 3 companies have a healthy cash coverage

Over the past 3 FYs, we see that STZ and DEO sells and
ratio, a higher ratio would mean that a greater proportion
replaces its inventory at an average of 1.89x and 0.98x in
of the cash available can be put into other use such as
a year respectively. Comparatively, TAP’s ratio is at a
interest payments. Prior to recalculation, TAP’s ratio was
massive 10.45x, This evidences that TAP has the most
the highest and is double that of STZ and DEO’s
liquid inventory and can most effectively sell its inventory
individual ratios. However, this figure is misleading as the
to convert into cash and meet current liabilities. Hence,
EBITA was inclusive of the 2.5 billion extraordinary
considering TAP’s extremely high turnover, not to mention
income explained in section 7.3.1.
its latest acquisition of MillerCoors and shift towards craft
breweries, its low current ratio as earlier explained is
unlikely to be a significant concern.
 America’s Beer Industry
We see that TAP has the lowest cash coverage ratio
among the 3 as of 2016, having recalculating its EBITA
without including the extraordinary income (depreciation
expense of 2016 amounted to $388 million). This could be
attributed to ts rise in current liabilities and low current
ratio post-MillerCoors acquisition. In the long run, it is
likely to be in a worse position to fulfil its obligations to its
lenders unless they are able to repeat their extraordinary
income gains year on year, which is highly unlikely.
Asset Turnover
STZ and DEO have similar ratios and are thus almost as
efficient as each other. TAP is rather inefficient in
comparison with its competitors, despite generating more
revenue than DEO (but less than STZ), as its asset base
is very large. This is seen from the several breweries that
TAP manages directly as compared to STZ and DEO
which largely outsource their breweries to smaller
6. Profitability
Gross Margin
The gross margin of all 3 companies are relatively
constant for the past 3 years, with DEO having the
highest margin compared to the other 2 companies. This
suggests DEO being more efficient and profitable than
TAP and STZ.
Comparing the gross margins of the 3 companies, TAP’s
gross margin appears to be facing a slight drop each
year. A possible attribution for this is the noticeable
changing trends towards craft beers in the US. In stark
contrast, STZ’s gross margins is on a steady rise between
the three-year period, likely due to the joint venture with
Owens-Illinois, Inc, a glass-bottle manufacturing
company, completed in Dec 2014. With the joint venture
in existence, coupled with the prospective economies of
scale, the cost of goods sold (COGS) would have likely
been reduced each year. Finally, Diageo sees a fall in
gross margin in 2015, but a pick-up in 2016, albeit not to
the level in 2014. The fall in 2015 is likely due to the
noticeable shift in trends in the US, its largest and most
profitable regional unit.
Operating Margin
Despite DEO’s apparent higher gross margin from the
other two companies as earlier explained, its operating
margin is not significantly higher perhaps due to high
overhead costs. Its operating margin generally plateaued
over the three years, with a slight drop in 2015. However,
its rose again in 2016 which could be attributed to the
series of operational and productivity gains and its
aggressive sale of mass-market brands while it pushed
further into the increasingly popular premium spaces.
TAP’s sharp rise in 2016 has led its operating margin to
be greater than that of its gross margin, which is an
anomaly. This is primarily due to the closure and sale of
its Eden, North Carolina Brewery as well as a net special
item (non-recurring income) gain of 2.5 billion after tax
related to the fair value remeasurement of their pre-
existing 42% interest in MillerCoors over its carrying
value, as well as the reclassification of the loss related to
MillerCoors historical accumulated other comprehensive
income. Taking this extraordinary income out, we realise
TAP has an operating margin lower than that of its
competitors at 16.07%, which is more in line with its 3
year trend. For STZ, despite consolidations in its beer
segment with acquisitions, the wine and spirits segment
were beset with a large increase in selling, marketing and
promotion costs which the increase in sales volume was
unable to offset resulting in an overall decrease in
operating margins from 2014 onwards.
 America’s Beer Industry

Profit Margin 
 Return on Equity (ROE)

We analysed the unadjusted ROE for the three

companies over a 3-year period as shown:

TAP and STZ’s profit margin trend closely resembles that
of their operating margin, indicating that the non-operating
income, interests expense and income tax was relatively
insignificant in their overall net income. However, DEO’s
profit margin appears to be inversely proportionate to its
gross operating margin. The initial rise in 2015 might have
been possible attributed by DEO’s investment decisions
where it sold off Gleneagles Hotel Limited to real estate
developer company, Ennismore. In 2016, an interesting
but conceivable drop in profit margin could have been
attributed to the US$75 million compensation to Dr Vijay
Mullya in order for him to resign as Chairman and non-
executive director of Spirits Limited after a bitter stand-off.
The ROE for DEO remained generally constant over
the three years although it did slope downwards in
2016. One the other hand, TAP faced a sharp rise in
2016 while STZ experienced a sharp drop in 2015,
most notably due to the ROE gains due to their
acquisitions and joint ventures that led to several one-
off extraordinary income gains in 2016 and 2014
respectively.
To better analyse the relative component of each
impact within the ROE, we further broke down the ROE

Notably, using the adjusted profit margin for TAP in 2016

shows that in actuality, there is a rather low profit margin
in 2016. Possible attributions include the mix shift towards
lower revenue packs and contract brewing volume in
Canada. Overall on the bottom line, 2016 Canada
underlying pretax income declined 12.2% to $267.3
million, driven by lower volume, higher brand amortization,
commercial investments and negative foreign exchange
Prior to adjustments, TAP’s ROE largely came from its
impacts. We also determined that the fair value of TAP’s
high net margin, STZ’s from its high asset turnover ratio
brands in Canada was lower than their carrying value.
and DEO ROE is attributed to its equity multiplier.
Hence, despite having the highest ROE, DEO’s ROE
Considering other regions, there was an indirect tax
may not be as rewarding as it seems; indeed, a high
provision charge of approximately $50 million for its
equity multiplier suggests that DEO is taking up large
Europe business which affected net sales. Also, the pro
debts rather than using equity to finance their asset
forma net income from continuing operations attributable
purchases.
to Macatawa Bank Corporation in 2016 decreased 48.9%
due to higher charges on their indefinite-lived intangible
However, upon adjusting for TAP’s extraordinary
asset brand impairment. Furthermore, the pro forma net
income, TAP’s ROE decreases significantly to a mere
sales decrease of 2.3% in 2016 which was driven by
3.53%, which pale in comparison to that of STZ’s
unfavorable foreign currency exchange rates, which had a
17.11% and DEO’s 27.53%. This is driven by the sharp
negative impact of $182.4 million. Altogether in 2016, TAP
drop in net margin upon adjustment, as well as the rise
had impairment charges of $526.0 million versus $275.0
in shareholder’s equity from $7,043 mill in 2015 to
million in 2015.
$11,418.7 mil in 2016 upon an equity offering of 29.9
million Class B shares. Considering that the one-off
extraordinary income gain do not reflect an increased
ability of the company to generate profit from
shareholder’s equity, this new adjusted ROE would be a
better indication of the company’s current and future
profitability.
 America’s Beer Industry
Return on Assets (ROA)
TAP’s ROA sees a sharp rise between 2015 and 2016,
STZ instead sees a large drop in ROA between 2014 and
2015, and finally DEO has an ROA that appears generally
constant over the three years. The rise in TAP’s ROA may
likely indicate that the company has been efficiently using
its capital to invest into its net income. One possible
reason for this would be the general fall in aluminium and
fuel pricing along with supply chain cost savings which
drove the COGS down by 5.0% (though these factors
could be offset by brewery inflation). As for STZ, a
possible attribution for the fall in ROA may be due to the
increase in assets from the acquisition of Meiomi Luxury
Wines and Ballast Point Brewing & Spirits in 2015.
Overall, after adjusting the net income figures, the ROA in
2016 decreased from 9.50% to 1.57%. After taking into
account the adjusted net income, TAP’s ROA is now
considerably smaller than its competitors, revealing a less
efficient use of assets to generate profits. This is not
surprising since the net income increase was due to the
gains in revaluation rather than a more effective
conversion of assets to income.


7. Overall Relative Valuation
Hence, taking into consideration both the financial
health and performance of these companies, we can
now evaluate whether any of the three companies are
over or under valued.
At first glance it can be seen how the one-off
extraordinary income of 2.5 billion arising from one of
the biggest mergers in the industry’s history severely
impacted the financial ratios for TAP. Originally, TAP’s
ratios were extremely promising, considering its
relatively lower stock price comparative to the rest;
however, upon adjustment. It seems that TAP is instead
overpriced relative to STZ and DEO - with a very high P/
E ratio despite a small ROE and ROA. While TAP’s
MillerCoors acquisition may seem promising for the
future, we note that its share price has risen in tangent
due to investor confidence. Taking a leaf from the P/S
ratios, the current investor faith in TAP may be
unreasonably elevated given TAP’s unchartered move
from commercial towards craft beers and over-promise
in the MillerCoors acquisition. Moreover, such mergers
and acquisitions do not happen on a yearly basis for
TAP to sustain its net income and implicating ratios.
Between the 2 other companies, STZ will be a better
investment decision given it leverages less (from the P/B
and D/E ratios) than DEO, making STZ financially
healthier.
 America’s Beer Industry

Appendix

http://fortune.com/2016/01/26/big-beer-craft-beer-merger-acquisition/
http://archive.jsonline.com/business/molson-coors-sees-cost-cuts-sales-growth-with-control-of-millercoors-
b99614205z1-345941932.html
http://seekingalpha.com/article/4013184-molson-coors-millercoors-acquisition-key-takeaways
http://www.cbrands.com/news-media/constellation-brands-reports-fiscal-2015-results-and-fiscal-2016-outlook
http://www.cbrands.com/news-media/constellation-brands-reports-fiscal-2016-results-and-fiscal-2017-outlook
http://uoinvestmentgroup.org/wp-content/uploads/2015/05/Constellation-Brands-STZ-Update-Final.pdf
http://www.telegraph.co.uk/business/2017/01/26/diageo-profits-soar-favourable-exchange-rates-pour-life-drinks/
https://www.forbes.com/sites/samanthasharf/2014/04/09/constellation-brands-brews-earnings-beat-off-beer-business/
#5fe257b25361
http://www.cbrands.com/news-media/constellation-brands-reports-fiscal-2014-results-and-fiscal-2015-outlook
http://www.cbrands.com/news-media/constellation-brands-reports-fiscal-2015-results-and-fiscal-2016-outlook
http://www.cbrands.com/news-media/constellation-brands-reports-fiscal-2016-results-and-fiscal-2017-outlook
https://www.forbes.com/sites/greatspeculations/2014/10/30/dont-get-drunk-on-constellation-brands-stock/
#45504396f44c
http://www.marketwatch.com/story/molson-coors-profit-rises-above-expectations-2016-05-03
http://www.denverpost.com/2016/02/11/molson-coors-sales-income-drop-on-declining-beer-volumes/
h t t p : / / w w w . m o l s o n c o o r s . c o m / ~ / m e d i a / m o l s o n % 2 0 u s / e n / p d f s / fi n a n c i a l / t a p % 2 0 -
%20earnings%20release%202016%20q1.ashx
http://molsoncoors.com/~/media/molson%20us/en/pdfs/financial/tap%20earnings%20release%202015%20q4.ashx
America’s Beer Industry

Annex

TAP

in (millions) 2016 2016 (Adjusted)

Net sales 4,885.0 4,885.0

Cost of Goods Sold (3,003.1) (3,003.1)

Gross Profit 1,881.9 1,881.9

Marketing, general and (1,597.3) (1,597.3)

admin expenses

Special items, net 2,523.9

Equity income in Miller 500.9 500.9

Coors

Operating Income 3,309.4 785.5

Interest income (expense), (244.4) (244.4)

net

Other income (expense), (29.7) (29.7)

net

Income from continuing 3,053.3 511.4

operations before income
taxes

Income tax benefit (1,050.7) (1,050.7/3,035.3)*511.4 = 


(expense) 177.0

Net income (loss) from 1984.6 334.4

continuing operations

Income (loss) from (2.8) (2.8)

discontinued operations,
net of tax

Net income (loss) (5.9) (5.9)

attributable to non
controlling interests

Net income (loss) 1,975.9 325.7

Profit Margin 1,975.9 / 4,885.0 = 40.45% 325.7 / 4,885.0 = 6.67%