Constellation Brands reports ‘strong’ spirits sales

US drinks producer Constellation Brands has reported soaring sales and profits during the second quarter of its financial year, with “strong” results for the group’s spirits division.

New York-based Constellation Brands has reported a double-digit profit increase in Q2

Attributing growth largely to the success of its beer business, the Svedka Vodka maker saw its net sales grow by 8% to US$1.73 billion, while operating profits increased 27% to US$479m.

“We posted outstanding results for our second quarter driven by the impressive, sustained momentum of our beer business, which is also driving an increase in our EPS projection for the year,” said Rob Sands, president and CEO of Constellation Brands.

“Our wine and spirits business posted improved margins, strong sales growth for our spirits portfolio and excellent financial results for our Canadian business.”

Constellation Brands’ wine and spirits portfolio grew sales by 3% on an organic basis, led by Paul Masson Grande Amber Brandy and Svedka Vodka.

Net profits for the New York-based group’s wine and sprits brands grew by 4% due to the “volume growth and lower cost of product sold”.

Free cash flow for the first six months of fiscal 2016 totalled US$508m, compared to US$360 million for the same period last year.

“We are increasing free cash flow guidance for fiscal 2016 to a range of US$200m to US$300m,” said David Klein, executive vice president and CFO of the group.

“The anticipated increase is being primarily driven by higher earnings for the beer business and lower tax and interest payments, as we now expect to generate operating cash flow of US$1.25 to US$1.45bn.”

Constellation expects its wine and spirits business to generate low to mid single-digit growth at end of the fiscal year.

In August this year, the firm launched a new start-up investment business, which acquired a minority stake in the bottled cocktail brand founded by Diageo Reserve World Class 2014 winner Charles Joly.