US: Constellation Brands Q2 profits up, despite wine wars

By | 4 October 2007

Constellation Brands has posted a healthy rise in Q2 profits, despite a marked dip in sales.

The drinks giant said today (4 October) that earnings available to common shareholders came in at US$72.1m, a lift from $66m in the corresponding period a year earlier.

Sales in the quarter fell by 37% to $892.6m, with gains from recently-acquired Svedka Vodka as being offset by a change in reporting methods for its Crown Imports and Matthew Clark joint ventures.

In organic terms, the company saw wine sales slip by 1%, with North America seeing sales fall by 4% as Constellation reduced distributor inventory levels in the US. Sales in Europe, meanwhile, were up by 4%, with sales in the UK registering a "slight increase". Australia and New Zealand saw sales drop by 7%. "The branded wine market in the UK and Australia reflects ongoing competitive challenges and continued pricing pressure," the company noted.

The company's results were boosted, however, by a strong performance by its spirits stable, where net sales recorded a 25% leap in the quarter, driven by the purchase of Svedka in March.

"We have substantially completed our previously announced US wine distributor inventory reduction initiative during the second quarter," said Constellation president and CEO, Rob Sands. "For the quarter, we delivered solid cash flow and reduced our debt by more than $200m from first quarter levels.

"As anticipated, both the US wine distributor inventory reduction and the lingering softness in our UK business impacted our overall performance. However, we believe the distributor inventory initiative, as well as our ongoing efforts to improve performance in the UK, will better position us for long-term growth.

"Our Crown Imports joint venture is gaining traction and we look for continued growth as we strive to maximise the long-term potential for Corona and the other brands in the joint venture's leading imported beer portfolio in the US," Sands added.

Looking forward, Constellation raised its full-year profit outlook to between $1.34 and $1.42, up from its previous forecast of between $1.30 and $1.40.

Sectors: Spirits, Wine

Companies: Constellation

View next/previous articles

Currently reading -

US: Constellation Brands Q2 profits up, despite wine wars

There are currently no comments on this article

Be the first to comment on this article

Related articles

SWEDEN: Vin & Sprit sale going “according to plan” - Government

The sale of the Swedish state-owned makers of Absolut Vodka, Vin & Sprit, is progressing "according to plan", as speculation mounts that a buyer will be named in the coming weeks.

just the round-up - The week in drinks

The top ten most visited stories on just-drinks this week:

RUSSIA: Russian Standard ups production, warehousing capacity

Russian Standard has expanded its production centre and acquired extra distribution space near its Russian headquarters.

just-drinks tagline

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page