US: Tough UK market hits Constellation target
Constellation Brands has lowered its full-year earnings per share forecast on the back of revenue and margin pressures in the UK.
The US-based drinks giant confirmed the move today (4 January) as it unveiled its third-quarter figures. Sales for the three months to 30 November came in at US$1.5bn, an 18% rise on the corresponding period a year earlier. In organic terms, however, the increase was only 7%. Operating income for the quarter rose by 7% year-on-year to $236m.
"Strong imported beer performance, growth from branded wine in North America, and the addition of Vincor generated solid results for the quarter," said Richard Sands, Constellation's chairman and CEO. "We continue to be very optimistic about our portfolio's long-term growth potential, although our third-quarter results reflect ongoing softness in our UK branded wine business as very challenging market conditions persist."
The company said it now expects its comparable fiscal 2007 EPS to come in between $1.65 and $1.70, a reduction on the earlier forecast of $1.72 to $1.76.
Constellation's performance in the UK in the quarter was hit by what the company said were "lower volumes and the impact of the large retailers benefiting from a highly competitive environment, particularly given the availability of low-cost bulk Australian wine".
The company saw US imported beer net sales rise by 16% in the period, thanks to volume growth in its Mexican beer portfolio, which includes Corona Extra, the biggest selling imported beer in the US.
"Constellation's imported beer business delivered strong third quarter growth as consumers continued to trade up in the category," Sands added.
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