Constellation Brands 3Q adjusted profit tops view

January 7, 2009 7:03:24 AM PST
Constellation Brands Inc., which sells Mondavi wine, Corona beer and Svedka vodka, said Wednesday its fiscal third-quarter profit fell 30 percent because of restructuring costs and weaker sales, and it trimmed the top end of its 2009 forecast amid the slowing global economy. The world's biggest winemaker by volume said it earned $83.5 million, or 38 cents a share, in the quarter ended Nov. 30, down from $119.6 million, or 55 cents a share, a year earlier. Excluding one-time charges, the company earned $132 million, or 60 cents a share, in the latest period.

Sales were hurt by currency exchange rates, dipping to $1.31 billion from $1.41 billion, with net sales excluding excise taxes falling 6 percent to $1.03 billion.

Analysts surveyed by Thomson Reuters had expected profit of 59 cents per share on sales of $1.13 billion.

The company tightened its 2009 adjusted profit outlook to between $1.68 per share and $1.72 per share, from a prior forecast of $1.68 per share to $1.76 per share, citing the impact of the economic downturn on its key markets.

In the third quarter, restructuring and acquisition-related charges and other special items totaled $21 million before taxes.

Branded wine sales fell 7 percent to $849 million, with a 2 percent increase in sales of U.S. brands such as Clos du Bois and Wild Horse more than offset by an 11 percent drop in Europe and a 2 percent decrease in Australia and New Zealand.

Beer sales in its Crown Imports wholesale business joint venture edged up 1 percent to $555 million but operating profits were flat.

Sales of spirits fell 5 percent to $111 million despite a 60 percent gain for the Svedka premium vodka produced in Sweden that Constellation Brands acquired in March 2007.

Its more than 250 brands run from jug wines to coveted California reds, including the Ravenswood, Banrock Station and Woodbridge by Robert Mondavi labels. It also imports Corona and St. Pauli Girl beer and owns liquors such as Fleischmann's vodka and Black Velvet Canadian whiskey.

Constellation Brands acquired Australian vintner BRL Hardy Ltd. in 2003 in a $1.1 billion cash-and-stock deal that made it the world's largest wine business.

In recent years, it has been staking a bigger claim in the more-profitable end of the U.S. wine market. It bought the U.S. wine business of Fortune Brands Inc. for $885 million in December 2007, boosting its collection of $8-to-$11 wines with popular brands such as Wild Horse.

Based in Fairport, N.Y., the company employs 8,200 people worldwide.

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