Wine and spirits maker Constellation Brands, Inc. (STZ: Quote,CBR.AX,STZ-B: Quote) on Friday reported a 23 percent decline in second-quarter profit, as an increase in volume was offset by higher promotional costs and provision for income taxes. However, adjusted earnings beat analysts' estimates. Looking ahead, the company raised its comparable earnings outlook for fiscal 2013.
Victor, New York-based Constellation Brands said in June that it agreed to acquire the remaining 50 percent interest in Crown Imports LLC joint venture, a beer importer in the U.S., for $1.85 billion. Crown Imports is the company's 50:50 joint venture with Mexican brewer Grupo Modelo S.A.B. de C.V (GPMCY), owner of the Corona Extra beer.
Constellation Brands said Friday that it continues to expect the acquisition of remaining 50 percent interest in Crown Imports to close in the first quarter of calendar 2013. The company also said it has secured financing for the acquisition during the second quarter.
The company's wine and spirits organic net sales for the second quarter on a constant currency basis decreased 1 percent, reflecting an increase in volume that was primarily offset by higher promotional costs.
Gross margin for the quarter was 40.8 percent, down from 41.0 percent in the year-ago period.
Constellation Brands' net income for the second quarter declined to $124.6 million from $162.7 million in the previous-year period. Earnings per class A common share were $0.67, down from $0.76 per share a year ago.
Comparable net income for the quarter was $131 million or $0.71 per share, compared to $164.8 million or $0.77 per share in the same period last year.
On average, nine analysts polled by Thomson Reuters expected the company to report earnings per share of $0.54 for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter rose 1 percent to $698.5 million from $690.2 million in the same quarter last year, but missed analysts' consensus estimate of $710.09 million.
For fiscal 2013, Constellation Brands now expects reported earnings per share in a range of $1.87 to $1.97 and comparable earnings per share of $2.00 to $2.10.
Earlier, the company forecast reported earnings per share of $1.89 to $1.99 and comparable earnings per share of $1.93 to $2.03.
The company's reported earnings for fiscal 2012 were $2.13 per share, while comparable earnings were $2.34 per share.
Analysts currently anticipate earnings of $1.99 per share for the year.
Further, Constellation Brands currently anticipates full-year effective tax rate for fiscal 2013 to approximate 30 percent, which is the primary driver of the improved comparable basis earnings per share guidance for the year.
In Friday's regular session, STZ is trading at $35.33, up $0.61 or 1.76 percent on a volume of 75,797 shares.
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by RTT Staff Writer
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