Constellation Brands moves to 2Q profit

EMILY FREDRIX

Associated Press

MILWAUKEE (AP) -- Wine and spirits maker Constellation Brands Inc. said Thursday that it moved to a fiscal second-quarter profit because of lower restructuring costs and the absence of last year's impairment charge, beating analyst estimates.

The Victor, New York-based maker of Robert Mondavi and other wine brands earned $99.7 million, or 45 cents per share, for the quarter ended Aug. 31. That compares with a loss of $22.7 million, or 11 cents per share, a year earlier.

Prior-year results included a $21.8 million impairment charge and $35.5 million of restructuring costs. Those restructuring costs dropped to $3.2 million during the current quarter.

Analysts polled by Thomson Reuters, whose estimates typically exclude one-time items, expected a profit of 41 cents per share for the world's biggest winemaker by volume.

Sales slipped 8 percent to $876.8 million, partly because of the sale of Constellation's value spirits business and the stronger dollar. The performance still topped Wall Street's $834.2 million estimate.

Shares rose 38 cents, or 2.5 percent, to $15.53 in morning trading Thursday.

Sales fell 41 percent in Constellation's spirits sales, though that was mostly a result of the sale of its value spirits operations. The company announced in January it was selling its value spirits business, including brands like Fleischmann's whiskey, brandy, gin, rum and vodka, to Sazerac Co. for $274 million. The company opted to do that to focus on the premium end of the wine and spirits markets, where it can make more money.

Branded wine sales dipped 4 percent to $752.4 million as shoppers traded down to less-expensive products.

Consumers are also trading down in their beer purchases, skimping on pricier imports in favor of domestic brews. That hurt sales from the company's Crown Imports joint venture.

Those sales, including brands like Corona, dipped 5 percent to $693 million in the quarter. But Constellation said it is hoping to boost its results with the introduction of 24 oz. cans of Corona Extra and Corona Light into convenience stores this month. It is also making a bigger advertising push for the brand, purchasing more ad time for Corona Extra and Corona Light during National Football League games and the Major League Baseball playoffs.

Constellation maintained its guidance for full-year net income of $1.60 to $1.70 per share, a range that includes analysts' estimate of $1.63 per share.

Constellation said it is making headway on lowering its debt, which fell by more than $155 million during the quarter and is down more than $1 billion since the start of fiscal 2009 to $5.92 billion.

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AP Retail Writer Michelle Chapman contributed to this report from New York.

Copyright 2009 The Associated Press.

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