US: Constellation Brands upbeat but H1 sales struggle
- Sees new momentum in US wine sales
- Sales down 2% in Q2
- Maintains full-year profits guidance
Constellation Brands upbeat on months ahead
Constellation Brands has said that it sees fresh momentum in its wine, spirits and beer business, despite reporting a slight dip in half-year sales.
Net sales for the six months to the end of August were US$1.65bn, marginally down on sales of $1.67bn for the same period of last year, Constellation said today (6 October). The decline worsened in the second quarter, with sales down by 2% on the prior year.
Despite the slip, Constellation Brands' CEO, Rob Sands, was upbeat about the key US drinks market. "Our second quarter results demonstrate that we are gaining momentum from the successful execution of our US distributor strategy," he said.
"During the quarter, we experienced improving US wine depletion trends and retail execution despite an uncertain consumer and competitive environment. Our brand investments and promotional activities are helping to fuel growth in the marketplace for our core brands including Robert Mondavi, Kim Crawford, Clos du Bois and Blackstone," Sands said.
Sands added that falls in sales for Corona lager and Svedka vodka, two key non-wine brands in the firm's portfolio, also did not reflect an increase in orders from distributors. The group's wine business in Europe and Australia continued to struggle, with sales down by 10% for the half-year and by 14% in the second quarter.
Constellation's net profits leapt by 32% to $140.4m for the six-month period, led by gains in the first quarter. Net profits fell by $8.4m to $91.3m in the second quarter, while operating profits fell by 5% on the same period of the previous year.
The Hardys wine producer maintained its profits guidance for the year. Comparable EPS is expected to hit between $1.63 to $1.78 for the current year, up from the company's earlier prediction of $1.53 to $1.68. EPS was $1.69 on a comparable basis last year.
"While some uncertainty remains in global markets, we are focused on building a stronger business for the future," said Sands. "We have demonstrated this during the second quarter by generating strong free cash flow, paying down debt and driving profitable organic growth."
For the full announcement, click here.
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