The Wall Street Journal - 31.10.2019

B6| Thursday, October 31, 2019 ** THE WALL STREET JOURNAL.**

BUSINESS NEWS

The brewer said it will seek to develop new offerings including teas and coffee. A plant in British Columbia.

DARRYL DYCK/BLOOMBERG NEWS

Molson Coors Brewing Co.

plans to cut hundreds of jobs

as it tries to reinvent its busi-

ness and move beyond just

selling beer.

The maker of Coors Light

and Miller Lite said Wednes-

day it expects to cut between

400 and 500 positions as part

of a broader restructuring that

will also include the company

BYMICAHMAIDENBERG

dropping the word “Brewing”

from its name.

Most of the cuts will be tar-

geted at employees in the U.S.

and Canada, a spokesman said.

The company employed about

18,000 workers globally at the

end of last year, with more

than half working in North

America, according to its lat-

est annual report.

In the U.S., brewers are

struggling with weaker de-

mand as Americans drink less

alcohol and, in particular, stop

reaching for beer.

Sales volumes in the U.S.

for alcohol dropped last year

and in 2017, with beer volumes

falling 1.5% and 1.1%, respec-

tively, according to industry

tracker IWSR.

Grappling with weak sales

of Coors Light, Molson Coors

last year said it was seeking to

build a broad portfolio of

“brewed beverages,” including

beer, tea and coffee.

The company has invested

in Colorado-based Bhakti Chai

Tea Co. and bought a Califor-

nia-based maker of kombu-

cha—a fizzy and fermented

tea, The company this year

said it started selling canned

wine and an alcoholic coffee

drink.

It said the restructuring

will help it streamline opera-

tions and free up resources to

invest in premium beers and

other drinks. To reflect that

strategy, it will also change its

name to Molson Coors Bever-

age Co.

“Our business is at an inflec-

tion point,” Molson Chief Exec-

utive Gavin Hattersley said.

Molson’s portfolio also in-

cludes Miller High Life, Blue

Moon and other beers and

drinks.

Shares of the company fell

3.1%.

Molson expects to record

$120 million to $180 million in

charges tied to the job cuts

and other changes, such as the

closure of its office in Denver.

The company will designate

Chicago as its operations

headquarters for North Amer-

ica and move other functions

from several offices around

the country to Milwaukee.

Net sales at Molson fell to

$8.09 billion during the first

nine months of the year, down

3% from a year earlier.

What the company calls

brand volumes—or sales vol-

umes of its brands to external

customers—dropped 2.4% in

the third quarter.

Molson also said it plans to

invest several hundred million

dollars to modernize its brew-

ery in Golden, Colo.

—Jennifer Maloney

contributed to this article.

Molson to Cut Jobs, Tap New Drinks

Company expects as

many as 500 job cuts

as it invests in a new

beverages portfolio

approved earlier this year, be-

cause that version is given

through intravenous injection

rather than through the spine.

The news is a setback for

Novartis, which hoped the

trial targeting older children

with type 2 SMA—a milder

form of the disease—would

pave the way to treat a much

broader group of patients.

There are around 4,800

older children living with type

2 SMA in the U.S. Only around

300 of those would be eligible

to receive Zolgensma in its al-

ready-approved form.

Jefferies analyst Peter Wel-

ford said in a note to clients

that losing that potential mar-

ket would erode Zolgensma’s

sales potential by nearly a

third. He forecasts peak sales

at about $2.8 billion but says

that would fall to $2 billion if

the company is unable to sell

the treatment for older chil-

dren with type 2 SMA. Mr.

Welford and other analysts be-

lieve the stop is likely to delay,

rather than derail, the trial.

Novartis said no children

who had received the spinal

injection of Zolgensma had

suffered nerve inflammation. It

also said no other animal stud-

ies had shown this side effect.

Earlier this month, Novartis

reported the trial had so far

shown positive results. To re-

sume the trial, Novartis will

have to provide data to the

FDA to reassure the agency

there are no safety concerns

over the spinal injection in

children.

Despite its eye-catching

price tag, Novartis said Zol-

gensma has sold well since its

launch in late May, overcom-

ing concerns about whether

insurers would cover the

treatment.

Novartis defended the

price, saying it would cost half

that of the current standard

treatment, Biogen Inc.’s Spin-

raza, over a 10-year period.

Spinraza, which is a continu-

ing treatment, costs $750,000

for the first year and $375,000

for each year after that.

The company also pointed

to a study by the independent

nonprofit Institute for Clinical

and Economic Review, which

said Zolgensma is worth $2.1

million when given to new-

borns who haven’t yet devel-

oped symptoms of the disease.

The drug halts, rather than

reverses, the condition—so the

earlier a patient receives treat-

ment, the better the outcome.

Novartis also faced scrutiny

after it discovered earlier this

year that testing data related

to the manufacture of certain

Zolgensma lots had been ma-

nipulated by scientists at the

unit that makes it.

The FDA criticized Novartis

for failing to disclose those

concerns immediately but said

the manipulation didn’t

change its view that the drug

is safe and effective.

Novartis AG has paused a

clinical trial of its Zolgensma

gene therapy after a separate

study on animals raised con-

cerns about side effects, deal-

ing a setback to the company’s

efforts to broaden the market

for the world’s most expensive

drug.

The trial treated children

up to 5 years old with spinal

muscular atrophy, or SMA, an

inherited muscle-wasting dis-

ease, through a spinal injec-

tion of the $2.1 million-per-pa-

tient treatment.

The U.S. Food and Drug Ad-

ministration ordered a partial

hold on the trial after Novartis

reported that primates receiv-

ing Zolgensma through spinal

injection suffered nerve-cell in-

flammation, sometimes accom-

panied by cell degeneration.

The halt doesn’t affect the

use of the therapy in children

up to the age of 2, which was

BYDENISEROLAND

Novartis Drug Trial Halted Over Safety Concerns

TOKYO— Sony Corp. re-

ported a better-than-expected

quarterly profit thanks to

strong demand for its smart-

phone camera sensors, a result

that may invite further pressure

from activist investor Daniel

Loeb to spin off the unit.

Sony said Wednesday its net

profit for the July-September

period rose 9% from a year ear-

lier to ¥188 billion ($1.7 billion),

beating analyst expectations.

The image-sensor business,

which supplies Apple Inc. and

other smartphone makers, re-

corded an operating profit of

¥76 billion on ¥311 billion in

revenue—both quarterly re-

cords for the unit.

Sony didn’t mention the

iPhone 11 by name, but the Ap-

ple smartphone lineup intro-

duced in September likely

drove Sony’s strong sensor

performance.

Other iPhone suppliers, such

as display maker Japan Dis-

play Inc., have said demand for

the new iPhone models has ex-

ceeded their expectations.

Sony’s customers have been

adding more cameras—and

thus more sensors—to their

handsets to offer more picture-

taking functions, a trend the

company believes is likely to

continue.

Mr. Loeb’s Third Point LLC

has called on Sony to spin off

the image-sensor business.

The hedge fund has de-

scribed the business as a

crown jewel that isn’t properly

valued by investors because it

is lumped in with other Sony

businesses, such as life insur-

ance and television sets, that

have less growth potential.

Sony recently said it had no

intention of spinning off the

sensor business, which it said

had synergies with other Sony

products.

Mr. Loeb said he was disap-

pointed with Sony’s decision.

Hiroki Totoki, Sony’s finan-

cial chief, declined to address

the issue Wednesday, saying

only that “constructive discus-

sion is always welcome.”

Sony said it expected to sell

more image sensors in the fis-

cal year ending March than it

projected three months ago.

“Our factories have been op-

erating at full capacity, and we

expect demand will remain

strong even after April next

year,” Mr. Totoki said.

The company lowered pro-

jections for its PlayStation unit.

It now expects operating

profit of ¥240 billion in the

current fiscal year, down ¥40

billion from what it projected

for the business in July.

Sony expects to sell fewer

PlayStation 4 consoles and

software than previously fore-

cast for the year: 13.5 million

consoles instead of 15 million.

As part of cost-management

efforts at the unit, Sony said

Tuesday in the U.S. that it was

shutting down the PlayStation

Vue internet TV service next

year.

Mr. Totoki said he was con-

fident Sony’s PlayStation 5, due

to go on sale in late 2020,

would be successful against

competition from new game-

streaming services.

Atul Goyal, an analyst at

Jefferies, said he expected the

PlayStation 4 to keep selling

after the introduction of the

PlayStation 5 because Sony is

likely to cut the price of the

older machine.

BYTAKASHIMOCHIZUKI

Sony Unit’s Strength Is Two-Edged Sword

Customers have been adding more cameras and more sensors to their handsets.

JOHN LOCHER/ASSOCIATED PRESS

The United Auto Workers

said Wednesday it has struck a

new tentative labor deal with

Ford Motor Co., as union bar-

gainers look to move quickly to

wrap up contract talks follow-

ing a 40-day strike at General

Motors Co.

The proposed agreement,

which still must be ratified by

Ford’s UAW-represented work-

ers, clears the way for the

union to turn attention next to

negotiations with Fiat Chrysler

Automobiles NV, which labor

experts and industry analysts

expect to be thornier with the

car company pursuing a merger

with France’s PSA Group.

The UAW didn’t disclose

terms of the Ford deal, saying

it will first present the details

to union-hall leaders from

Ford’s U.S. factories in the com-

ing days.

Ford confirmed it had

reached a tentative deal with

the UAW.

Union bargainers headed

into Ford talks Monday using

the agreement struck with GM

this month as a template, look-

ing to reach similar terms on

wages and benefits for the

Dearborn, Mich., car maker’s

56,000 union-represented fac-

tory workers in the U.S.

The GM contract gives the

company’s workers better pay,

more job security for tempo-

rary workers and preserves

health-care contributions at 3%,

a rate far lower than the aver-

age for other private-sector

employees.

BYNORANAUGHTON

Ford Is

Next to

Reach Deal

With UAW

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