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US: Constellation Brands toasts Crown Imports for Q1, but sales slide

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  • Q1 net sales dip by 19% due to Aus, UK wine divestment
  • Reported net profits up by 51.7%, comparably up by 1%
  • Operating profits lift by 5.6%
  • Crown Imports hailed for driving Q1 performance

Constellation Brands has posted a marked fall in net sales in its first fiscal quarter results, but has highlighted the sell-off of its Australian and UK wine business for the decrease.

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US-based Constellation said this morning that net sales in the three months to the end of May came in 19% down on a year earlier, at US$635.3m. Net profits on a reported basis, however, leapt by 51.7% to $74.5m, with operating profits coming in 5.6% up at $101.7m.

The slide in sales was put down primarily to the divestiture of the Australian and UK wine business last year, with the operating profits rise credited to reduced corporate costs, an improvement in the North American operating results and the sale of the aforementioned wine division, which "generated an operating loss in the first quarter last year", the company said.

In comparable terms, net profits were flat, coming in just 1% up on a year ago at $84m, with operating profits increasing by 12% to $116m.

The company also highlighted its beer sales and distribution JV with Grupo Modelo in the US, Crown Imports, as enjoying a healthy first quarter. Net profits from the unit hit $60m, a 10% lift on a year-earlier, with sales rising by 9% and operating profits increasing by 10%. "The increase in net sales and operating income for Crown was primarily driven by volume growth due in part to the ongoing launch of the Victoria brand," the firm said.

Constellation's president and CEO, Rob Sands, professed himself "pleased" with the company's performance in the quarter."We believe focused marketing efforts at Crown are driving momentum in the beer business,” he noted. “With the sale of our Australian and UK business, we have significantly improved our financial profile and simplified our business. As a result, we are taking the next logical step to increase efficiencies and streamline our operations worldwide."

Looking forward, however, Constellation has revised its full-year EPS outlook on a reported basis downwards from a previous forecast of a maximum of $2.00 to between $1.82 and $1.92. On a comparable basis, the company's estimates remain flat on the previous year's $1.91 within an expected range of $1.90 to $2.00.

To read the company's official release, click here.


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