Boosted by price increases, Constellation Brands has reported a solid first quarter which, it said today (1 July), has set it on track to achieve its 2009 objectives.

The US drinks group said that reported diluted earnings per share (EPS) for the quarter ended 31 May 2008 were US$0.20, compared with $0.13 for the prior year first quarter.

First quarter 2009 diluted EPS on a comparable basis, which excludes acquisition-related integration costs, restructuring charges and unusual items, totalled $0.34 versus $0.21 for the prior year.

Consolidated first quarter net sales reached $932m up 3% on last year and 1% on a constant currency basis. Branded wine sales jumped 24% to reach $766m, whilst sales of spirits reached $106m, up 9%.
"Our first quarter results represent a solid start for the year and we are on track to achieve our fiscal 2009 strategic business objectives," said Rob Sands, Constellation Brands president and chief executive officer. "Efforts throughout fiscal 2008 set the stage for fiscal 2009, and milestones such as the recently announced sale of certain U.S. wine assets, underscore our focus on reducing borrowings, streamlining our portfolio and improving operational efficiency while enhancing our financial performance."

Sands added that the company's first quarter results reflected strong comparable basis margin expansion as the company implemented price increases in domestic and international markets and benefited from favourable product mix shift by adding the higher-margin Clos du Bois and Wild Horse wine brands, while disposing of the lower-margin Almaden and Inglenook wines.

"Our North America wine business turned in a strong performance. In the US, Robert Mondavi wines, Kim Crawford, Simi, Estancia and Franciscan all registered double-digit market growth for the first quarter," said Sands. "In Canada, brands from our premium Canadian portfolio performed well, including Jackson-Triggs, Sawmill Creek and Naked Grape, with Kim Crawford and Robert Mondavi also posting solid results." Additionally, Clos du Bois and Wild Horse were fully assimilated into our portfolio and we anticipate future growth for both brands."

Branded wine organic net sales on a constant currency basis for Europe and Australia/New Zealand decreased six percent and three percent, respectively. Internationally, the company has implemented price increases that have impacted volume growth but have enhanced overall margins and profitability.

Total spirits net sales increased 9% for the quarter, primarily due to strong growth of the Svedka Vodka brand.

"Svedka turned in another stellar quarter of growth, and other spirits brands including Black Velvet, Effen, Ridgemont Reserve 1792, Caravella and Meukow also performed very well," stated Sands.

"We remain confident about our ability to achieve Constellation's EPS and free cash flow goals for the remainder of the fiscal year while improving return on invested capital," said Sands. "Our ongoing efforts to effectively and efficiently adapt to the ever-changing market and economic dynamics in key markets around the world have better positioned us to deliver our long-term objectives."