US: Constellation Brands raises FY earnings target, Q3 sales drop
- Winemaker says tax gains to boost profits
- Sales drop by 2% in Q3
- Australian wine arm is weak link
Constellation Brands' sales fall by 2% in Q3
Constellation Brands has raised its full-year earnings guidance, despite suffering a 2% drop in net sales in the third quarter.
Constellation has moved its range for comparable earnings per share to between US$1.8 and $1.85 for its current fiscal year. It said today (6 January) that the upgrade, its second of the year, reflects lower-than-expected tax charges. The firm had previously predicted comparable eps between $1.63 and $1.78.
Net profits in the third quarter of the wine producer's fiscal year, the three months to the end of November, tripled on the same period of last year, to US$139.3m. Excluding one-off gains and charges, profits rose by 18% for the quarter.
Things were less rosy for Constellation at the top-line, with net sales down by 2% for the three months, to $966.4m. The US-based group said that it was dragged down by loss of revenue due to the sale of its UK cider business. It was also hit by a 12% drop in wine sales in its Australia and Europe division, which overshadowed a 1% rise in wine sales in North America. A strong performance from Svedka helped spirits sales to rise by 8%.
Constellation's CEO, Rob Sands, reiterated that the sale of the company's UK and Australian wine assets, announced two weeks ago, "is the right move for the company and positions us to better achieve the goals associated with our profitable organic growth strategy".
He added: "We are experiencing continued momentum from our US distributor transition, with positive depletion trends recorded during the quarter, and we continue to reap the benefits from our diligent focus on free cash flow.
"We are delivering on our strategic and financial plan and I am confident in our outlook for the remainder of the year," he said. Net sales for the first nine months of the year fell by around 1.5% to $2.62bn, while net profits leapt by 86% to $279.7m.
For the full announcement, click here.
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