US: Constellation Brands to shed jobs, cuts guidance
Constellation Brands plans to cut 5% of its global workforce and has trimmed its earnings guidance for 2009 due to worse-than-expected performances for its wine businesses in the UK and Australia.
Constellation, which also announced today (25 March) that it has completed the sale of its "value" spirits business, said that it plans to cut 5% of its global workforce due to weakening economies in key markets.
The California wine giant also cut guidance for underlying earnings per share for its fiscal 2009 to a range of between US$1.60 and $1.62. Previous guidance allowed for a range of $1.68 to $1.72, for the 12 months to the end of February 2009.
"The revision is driven primarily by an increasingly challenging global economic environment, particularly the accelerated deterioration in the company's UK and Australian businesses during its fourth quarter," the California-based wine giant said.
One-off charges totalling $430m, in part reflecting a loss of goodwill on some brands, will drive Constellation to a net loss for its full-year, the company said. It expects to report a net loss per share of $1.26 - $1.28.
CEO Rob Sands said that demand for its wines weakened significantly over Christmas.
"The most significant impact was felt in the UK, where the economy weakened during this critical selling season, retail competition intensified, and we made the decision to forego participation in significant price discounting offered by multiple grocers," he said.
Sands added that cost savings initiatives would stretch across Constellation's worldwide business and will include shedding up to 5% of the group's global workforce. Constellation Brands has around 9,000 employees worldwide.
More details will be announced in Constellation's full-year results statement, due 8 April, Sands said.
Separately today, Constellation said that it has completed the sale of its Value Spirits arm to Sazerac Co for $334m.
Constellation said that it would use the $210m net cash proceeds from the deal to help repay debt.
For fiscal 2010, the company said that it expects the challenging macro-economic operating environment to continue and, as a result, is targeting comparable basis diluted EPS growth in the low-to-mid single digit range versus fiscal 2009.
Sands said: "We are taking decisive action to ensure we are adaptive and responsive to the rapidly-changing global economy by remaining focused on creating efficiencies, generating cash flow and paying down debt."
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