US: Q3 reported net profit tumbles at Constellation

By | 7 January 2009

Constellation Brands has posted a 30% plunge in reported net profit for its third quarter, as sales in Europe struggled.

The US-based drinks company said today (7 January) that net profit for the three months to the end of November fell to US$84m. In comparable terms, however, net profit in the period registered a lift of 9% year-on-year to $132m.

Consolidated reported sales in the quarter were down by 6%, coming in at $1.03bn, while in organic terms, sales slid by 6% to $977m. Operating profit was flat in reported terms, at $198m, and up by 9% in organic terms, at $219m.

While branded wine sales registered a 7% slide, sales of spirits, which include Svedka vodka, also headed south, down by 5%, both in reported terms. In organic terms, however, the spirits division delivered a 5% lift, hitting $111m.

The company blamed the impact of year-over-year currency exchange rate fluctuations for the drop in reported sales.

In Europe, the company saw branded wine sales tumble by 27% in value terms to $133.8m, while consolidated sales in the region fell by 24% to $163.3m. In North America, sales rose by 2% to $780m, although sales in Australia and New Zealand came in down 22% to $87.9m.

"We are pleased with our performance especially given the challenging economic conditions that evolved over the course of the year," said Rob Sands, Constellation's president and CEO. "We have significantly improved margins, grown free cash flow, monetised assets and rapidly reduced debt.

"We believe that prioritising profit margin, free cash flow and ROIC is paramount in this environment and, on balance, an appropriate trade-off."

In the nine months to the end of November, sales rose to $2.92bn from $2.89bn a year earlier, with net income halving, to $105.4m from $221.5m. Operating profit slipped to $309.9m from $383.7m.

Going forward, Constellation said it was trimming its comparable diluted EPS range for the full year to between $1.68 and $1.72, down from the previous target of between $1.68 and $1.76.

Sectors: Beer & cider, Spirits, Wine

Companies: Constellation

View next/previous articles

Currently reading -

US: Q3 reported net profit tumbles at Constellation

There are currently no comments on this article

Be the first to comment on this article

Related articles

just the round-up - The week in drinks

The top ten stories published on just-drinks this week:

US: Kid Rock to launch beer brand in Drinks Americas JV

Drinks Americas Holdings has entered into a deal with the US music star Kid Rock to brew and fill kegs of a new beer brand American Badass Beer Company.

US: Tough times continue for Constellation Brands in Q1

Constellation Brands has posted a marked fall in net sales and profits for the first quarter of its current fiscal year.

Read more on this hot issue

The just-drinks interview - Constellation Europe

It is now more than a year and a half since Troy Christensen took the helm at Constellation Europe, the European division of the world’s biggest wine company. Given the current state of the European market, and the UK in particular, to call this a tough assignment would be something of an understatement. In this month’s just-drinks interview, Christensen spoke with Olly Wehring about how Constellation is addressing the most trying of market conditions.

just-drinks tagline

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page