US: Constellation Brands full-year profits jump
- Net profits at US$560m, versus $99m a year ago
- Net sales dip by 1% to $3.33bn
- Operating profits rise by 60% to $503m
- Group announces $500m share buyback
Constellation Brands reports a mixed fiscal 2011
Lower costs and charges have significantly boosted full-year profits for Constellation Brands, but sales were dragged down by the wine group's recently-sold Australia and Europe division.
Constellation Brands said today (7 Apri) that net profits for the 12 months to the end of February were up almost six-fold on the previous year, to US$560m. On a comparable basis, excluding one-off items - such as a $198m tax gain on the sale of the Australia and Europe wine business - profits rose by 9% on the previous year, said the Robert Mondavi winemaker.
Lower selling costs and fewer restructuring charges boosted operating profits, which rose by 60% on the previous year, to $503m.
It was a different story at the top line. Net sales dipped by 1% to $3.33bn, partially due to lost revenue from the sale of the UK cider business but also as a result of a 17% drop in sales at Constellation Wines Australia & Europe.
Constellation has since completed the sale of 80% of the Australia and Europe business to Australia-based CHAMP Private Equity for a cut-price AUD290m. The firm's rump North America business increased sales by 5% during the year, to almost $2.56bn, although this includes rises from Crown Imports and Sevdka vodka, as well as wine.
"We are realising the benefits from the implementation of our US distributor initiative," said Constellation's CEO, Rob Sands. "We experienced a strong finish to a year where we invested in our business and began building momentum around our product portfolio to drive future growth," said Sands.
In the fourth quarter, group net sales crept up by 1% to $715m. The firm returned to the black, with quarterly profits of $280m helping to erase the memory of net losses of $51m in the same period of the previous year.
Nevertheless, Constellation was cautious on its profits outlook for the year ahead. On a reported basis, earnings per share are likely to fall from $2.62 in the most recent year to a maximum of $2 in the current year, reflecting fewer one-off gains. However, comparable earnings per share, excluding one-off gains and losses, are expected to be at least flat.
On the group's planned $500m share repurchase scheme, group CFO Bob Ryder said: "While our near-term focus is on debt reduction, we believe it is important to have a share repurchase authorisation in place to provide flexibility over a multi-year period as part of our ongoing evaluation of the optimal capital structure for our business."
For the full company announcement, click here.
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