Global brewer Molson Coors has attributed its decline in net sales and underlying non-Generally Accepted Accounting Principles (GAAP) net income in the first quarter (Q1) of 2018 to a decline in US sales to wholesalers and overall industry softness as a result of US brand volume declines.

The company recorded a reduction of 4.8% from $2.45bn to $2.33bn in net sales and of 39.4% from $172.2m to $104.3 in underlying net income in the quarter.

Sales to wholesalers in the US declined by 6.7% as a result of under-shipping compared with Q1 2017 by around 450,000 hectolitres, which represents approximately $30m lost in gross profit. US brand volumes decreased by 3.8% due to poor weather, however, Molson Coors’ market share remained consistent with 2017.

The cyclical reversal of indirect tax provision benefit in Europe also negatively affected the company’s net sales and net income.

The US was the only Molson Coors operating region to experience decline in net sales, pre-tax income and underlying pre-tax earnings in Q1 2018. Net sales decreased by 5.8%, pre-tax income by 17.3% to $261.7m and underlying pre-tax earnings by 12.2% to $388.9m.

The region also recorded a 3.8% reduction in brand volume as a result of a decline in the premium light segment.

However, Molson Coor’s US business did see a 3.5% increase in cost of goods sold per hectolitre, which was caused by volume deleverage, aluminium inflation and higher freight and fuel costs.

Canada saw a 2.5% reduction in net sales, a decline of 56.5% in pre-tax income to $9.1m, but a 2.5% increase in pre-tax earnings to $44.7m compared with the first quarter of 2017. The region also recorded a 3.3% decrease in brand volumes and 4.8% reduction in financial volume.

Europe experienced declines of 1.9% in net sales, or 18.3% in local currencies, and 65.2% in pre-tax earnings, as well as an insignificant change in pre-tax income and an increase in market share as a result of a rising brand and financial volumes.

Molson Coors’ International businesses saw drops in net sales and volume of 7% and 7.1% respectively. However, it recorded a 146.7% increase in pre-tax income and 42% increase in pre-tax earnings. Pre-tax earnings increased by $5m compared to Q1 2017.

Total non-GAAP pre-tax earnings declined by 18.5% on a reported basis from $522.8m in Q1 2017 to $426.0m in Q1 2018. The decline on a constant currency basis was 19.7%. This was due to the 4.9% reduction in financial volumes to 20.8 million hectolitres, the impact of cycling indirect tax in Europe, global mix and higher input cost inflation, but partially offset by positive global net pricing and cost saving measures.

The company’s US GAAP net income increased by 33.4% from $208.5m to $278.1m in Q1, driven by one time purchase price settlement.

Molson Coors president and chief executive officer Mark Hunter said: “In the first quarter, which is seasonally the smallest profit quarter of the year for us, our Canadian, European and International businesses maintained their underlying progress from 2017. The U.S. beer industry had a softer-than-anticipated start to the year, which impacted both top- and bottom-line performance and which, when coupled with the US distributor inventory destocking and the anticipated cycling of the indirect tax provision benefit in Europe last year, led to an underlying EBITDA reduction of 18.5% for our company in the first quarter. We do not see these results as indicative of our full-year performance versus our plan, and we remain committed to delivering our 2018 guidance.”

The company recorded $315.2m US GAAP cash from operations as a result of a $328m cash payment from its acquisition of Miller International. Its underlying free cash flow declined $26.2m on the 2017 first quarter figure to $195.1m excluding the cash influx from its Miller International purchase.