Seeking to increase long-term profitable growth and reduce debt, Constellation Brands Inc. (STZ), on Wednesday announced that its Australian unit, Constellation Wines Australia (formerly Hardy Wine Company) will sell certain assets and implement changes to its wine portfolio and production footprint.
Constellation stated that three of the 10 production facilities and more than 20 vineyard properties of its Australian arm will be put on the auction block. Additionally, bottling operations of Constellation Wines Australia will undergo consolidation while over 30% of the company's Australian stock keeping units will be subjected to portfolio streamlining and rationalization.
The company's Australian unit will be trim by more than 20% or 350 positions, following the asset sales. Constellation expects to incur a total of approximately $140 million in net one-time costs, including one-time cash costs of about $45 million and net one-time non-cash costs of around $95 million, in connection with the Australian initiative.
The company noted that the strategic move will help to simplify its business and provide better focus on premium brands and operational efficiencies. In addition, Constellation expects the asset sales to generate positive cash, with proceeds from the transaction projected to exceed the cash cost of restructuring by more than $50 million.
According to the US wine maker, Australia remains one of the most important and dynamic New World Wine producing markets, and its Hardys and Banrock Station brands are two of the most recognized and consumed wines in the world. Australia is the largest New World Wine exporter based on volume and value, as well as being the second largest producer, and it is the third largest consumer market for these types of wines, the company said.
The company also revised down its reported profit outlook for fiscal 2009, following the proposed changes.
Looking ahead, the company slashed its reported earnings outlook for fiscal year ending February 28, 2009 to range between $0.86 and $0.94 per share from its prior guidance of $1.38 and $1.46 per share.
On a comparable basis, Constellation backed its earnings forecast range of $1.68 - $1.76 per share, higher than last year's earnings of $1.44 per share. The company affirmed that its reported net sales for the year will increase mid single-digits from fiscal 2008. Wall Street analysts expect the company to earn $1.72 per share, on revenues of $3.97 billion.
STZ closed Wednesday's trade up 1.62% at $22 on a volume of 2.08 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.