US: Constellation Brands ups profits guidance after solid Q1
Svedka vodka boosts Q1 sales
Constellation Brands has raised its full-year earnings guidance after reporting a solid start to its fiscal year.
Lower restructuring charges helped Constellation Brands to report operating profits up by more than 13% to US$96.3m for the three months to the end of May.
Net profits for the quarter leapt to $49.1m, from just $6m a year earlier, thanks to lower interest expense and a lower tax rate, Constellation said in its first quarter statement today (1 July).
The California-based wine giant increased its guidance range for diluted earnings per share (EPS). 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.
"I am pleased with our first quarter results that are in line with our expectations," said Rob Sands, president and CEO of Constellation.
Cost savings largely drove Constellation's solid profits performance in the first quarter.
Net sales slipped by 1% for the period, to $976m versus $1bn in the same period of last year, although the firm attributed the fall to the sale of Gaymer Cider Co in the UK and its value spirits business in the US.
Svedka vodka provided the sales highlight for the Robert Mondavi wine producer, with sales up 28% on an organic basis for the quarter.
Wine sales remained under pressure in North America, falling by 2%.
Constellation's Crown Imports beer venture with Grupo Modelo reported net sales down 3% for the period, to $622m, damaged by higher promotions, unfavourable mix and lower volume.
Sands said: "Our US distributor initiative gained traction in the first quarter as we experienced improved results at retail. We also increased brand investments and promotional activities and launched several new products, all of which drove an improvement in depletion trends."
For the full announcement, click here.
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