CANADA: Constellation battle hits Vincor earnings
Vincor International has seen third-quarter earnings slide due to the cost of fending off an unsolicited takeover bid from Constellation Brands.
The Canadian wine producer on Friday (3 February) posted net income of C$14.4m (US$12.6m) for the three months to 31 December, a fall of 25%. The cost of fighting Constellation's approach rose to C$9.5m, Vincor said.
Net revenue inched up to C$207m from C$206.2m a year earlier, as sales rose in Canada, the US and New Zealand.
Vincor president and CEO Don Triggs said the company had delivered a "solid" performance during the quarter.
"Financial results (were) in line with our expectations, despite challenging market conditions particularly in the UK and Australia, and the need to divert much of the senior management's time and attention to the unsolicited takeover bid."
The wine glut in Australia had an impact on sales, Vincor said, but the company managed to increase revenues there by 2%. The surplus in Australia also hit Vincor's performance in the UK, although rising sales of the company's Kumala brand gave a boost to revenues, which rose 1%.
Triggs said Vincor had started to implement a range of cost-cutting plans designed to boost efficiency across the business.
He added: "We remain confident in the long-term fundamentals of our company and our ability to create value for our shareholders by growing our business. Our brands have significant momentum in their national markets and we will invest toward their continued growth."
Vincor shareholders, who had backed the company's decision to fight the Constellation bid, were rewarded with a quarterly dividend worth C$0.15 a share.
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