US: Constellation Brands Q3 sales, profits fall

Constellation Brands, the world's largest wine firm, has reported a slide in third quarter earnings and a slip in sales, but said it is making progress on paying down debt.

One-off charges of US$81m saw net profits fall 47% for the three months to the end of November, to US$44m, California-based Constellation Brands said today (7 January). Excluding one-time items, profits fell 9%.

Net sales slipped 4% against the same three months of last year, to US$988m. Operating income fell by a third to $135m.

However, Constellation CEO and president Rob Sands remained upbeat. "During the quarter, we continued to execute well against our strategic goals of generating cash, paying down debt and reducing costs," he said.

"US branded wine net sales were impacted by continuing economic challenges, higher levels of promotional spending in advance of the holiday selling season, and the expected shift of sales to the second quarter from the third quarter as part of our US distributor network consolidation activities," added Sands.

He said the group noted some improvement in sales towards the end of the quarter.

Constellation reaffirmed its full-year guidance range for comparable earnings per share, of $1.6 to $1.7.

For the first nine months of Constellation's fiscal year, net sales fell to $2.66bn, compared to $2.9bn in the same period a year earlier. Net Profits were $150m, up from $105m in the prior year. 

There was no comment on Constellation's talks with Australian Vintage over a possible merger of Australian and UK operations.

For the full announcement, click here.

An update, following the group's conference call, appears here.