Analysis - Constellation Brands' CFO Switch: Wall Street Fears Change
Bob Ryder will leave Constellation Brands next month
The imminent departure of Constellation Brands' CFO has put the wind up many in the financial community, less so because of the speed of the move, more because of his past achievements.
On Monday, Constellation announced that Bob Ryder will leave the company at the beginning of next month. Ryder, who stepped in to the CFO role in 2007, did not detail where he is moving to, saying only that he will "seek new challenges and explore external opportunities".
Constellation was quick to highlight that his departure "is unrelated to the company's financial performance or financial reporting". That much is clear from the company's performance in the last eight years. In a note today, analyst CLSA said: "The partnership of CEO Rob Sands and CFO Bob Ryder has yielded very impressive results for Constellation holders. Ryder’s rather sudden departure increases the risk to the story going forward, in our view.
"Since joining in May 2007 as CFO, a few months before Sands became CEO, the company’s growth in EPS and the appreciation of the stock have been among the very best in the consumer space."
Consider this: In May 2007, Constellation's shares were trading at US$24.30. This morning, they're opening at $117.75.
While Ryder can't take full responsibility for such stellar numbers, it has been his hand on the purse-strings as the firm's share price has leapt by around 380%. There's glory by association, at the very least.
CLSA is not alone in voicing concern at Ryder's departure. Late on Monday, Stifel also termed the news a negative.
Meanwhile, Ryder's replacement, David Klein, serves as a possible spotlight on Constellation's strategy going forward. Klein moves across from the group's beer division, where he had held the CFO reins for a "fairly short" time, notes CLSA - 13 months.
One year prior to Klein joining the beer unit, Constellation spent $4.75bn on Grupo Modelo's US beer business and one of its breweries. Not only did the firm become the third largest brewer in the US overnight, but its beer operations are now the major driver of the group's growth: The 24% leap in full-year net sales reported in April was largely credited to the division.
For Constellation, then, it appears to be all about the beer right now.
Constellation Brands, Inc. - Strategy and SWOT Report, is a source of comprehensive company data and information....
Earlier today, Constellation Brands reported a near-26% leap in net profits for the year on an 8% rise in sales. Here, we take a closer look at the company's full-year performance by category. ...
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