US: Constellation Q1 leap, thanks to Mondavi
Constellation Brands has posted an impressive leap in its first quarter profit. The drinks giant announced today (30 June) that reported net income for the three-month period to 31 May leapt by 47% to US$75.7m thanks in part to its acquisition of Robert Mondavi Corp. in December.
Net sales for the period also rose, by 18% year-on-year to US$1.1bn for the company. Excluding results from the Mondavi purchase and the February purchase of 40% of Italian wine producer Ruffino, net sales for the period were up by 7%, the company said.
"Constellation Brands' true growth momentum continues to accelerate and deliver increasing shareholder value as we employ our business model to achieve our strategic vision," Richard Sands, Constellation Brands chairman and chief executive officer, said. "We hit our stride in fiscal 2005, and used that momentum to set the pace for a strong first quarter of performance to kick off fiscal 2006.
"Our base business delivered top-line growth of 7%, which was complemented by our acquisitions for an overall growth rate of 18%," Sands added. "We're particularly encouraged by healthy operating margin expansion in the quarter, which reflects the continued consumer shift to higher margin wine products and the benefits of the Robert Mondavi acquisition."
The group posted increases across the board, with net sales for wines rising by 23%, imported beers up by 10%, and spirits increasing by 8%.
Commenting on the results, Mark Swartzberg from analysts Legg Mason, said: "We consider the result another proof point that Constellation can deliver high single digit annual revenue growth while also expanding margins and returns on invested capital."
Looking forward, The company said that it sees Q2 income hitting US$0.35 to US$0.37 per share, or US$0.40 to US$0.42 on a comparable basis. Constellation held its forecast for annual earnings of US$1.46 to US$1.52 per share, or adjusted income of US$1.55 to US$1.61 per share.
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