Molson Coors grew its share in Canada, its largest market, for the first time in four years - which was well before the 2005 merger of Molson and Adolph Coors.

For this, they have the "Coors" part of the company, not the "Molson," to thank.

The continued strong growth of Coors Light, along with gains by smaller specialty brands and imports, offset continued declines in the flagship Molson Canadian brand.

The gain in Canada market share "represents the achievement of one of our most important goals leading into the merger," CEO Leo Kiely told investors Tuesday.

All told, it allowed Molson Coors to continue building its bottom line. The company reported second-quarter net income of $185 million, or $2.05 a share, compared with $156.2 million, or $1.83 a share, in the prior-year quarter.

Net sales increased 5.9 percent, to $1.68 billion.

Canada pretax income was $146.2 million, a 1.9 percent increase from 2006, while U.S. pretax income was $98.1 million, up 39.1 percent. Europe pretax income was $38.9 million, up 5.1 percent.

All figures exclude special gains and expenses, such as unusual tax items in both periods, a charge in 2007 for the decline in value of an agreement to import Foster's into Canada, and a 2007 gain on the sale of the company's interest in House of Blues Canada.

"Our second-quarter results show the ability of our company to deliver on the promise of our merger," Kiely said. "Our most recent results show that we're investing to build our brands and growth share consistently. And we're exceeding our cost-reduction goals, and we're growing profitability for our shareholders at a double-digit rate."

Investors saw enough warnings in the results to blip the company's shares lower by 1.3 percent, to $90.99, however.

While sales volume - the number of barrels sold to distributors - grew 0.7 percent, sales to retailers were down 0.7 percent.

When the company's sales to distributors outstrip retail sales, inventories build up, making a volume slowdown more likely later in the year. Judy Hong, an analyst with Goldman Sachs Group, put out a note Tuesday suggesting just that.

Molson Coors executives also described the company's U.K. problems, where a rainy summer and the lack of a World Cup soccer tournament caused a 7.5 percent sales-volume decline, nearly wiping out the volume gains in the U.S. and Canada. The summer continues to be wet and will negatively impact the third quarter, Molson Coors said.

The Canadian results also benefited from the annual Canada Day holiday falling in the second quarter this year, not the third quarter, and positive changes in several national and provincial tax rates.

Molson Coors Brewing

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Kiely's view

Molson Coors President and Chief Executive Officer Leo Kiely said he was pleased with the results overall, but he acknowledged the brewer faces challenges in the United Kingdom, where the pub industry is under pressure as more consumers favor take-home products.

• "You have to play the hand that's dealt. We've got tremendous business in the U.K. and tremendous brands. The industry sort of reality is just very tough."

David Milstead is finance editor of the Rocky Mountain News. He can be reached at milstead@RockyMountainNews.com or 303-954-2648.