Constellation hails Q3 as ‘dynamic chapter’
Svedka vodka and Paul Masson brandy owner Constellation Brands has reported solid single-digit net sales growth in its third financial quarter.
US drinks group Constellation Brands has reported a 3% net sales increase in its wine and spirits portfolio in Q3The US drinks producer saw net sales increase 6% to US$1.6 billion, while operating profit grew 19% to US$447m.
Describing the quarter as a “dynamic chapter” in its history, Constellation said results had been boosted by the “remarkable” performance of its beer unit, while wine and spirits experienced a “favourable mix”.
The firm revealed plans to build a new brewery in Mexicali, Mexico, and expand its Nava brewery. It also confirmed it had completed the acquisition of the Ballast Point craft beer company.
Constellation’s wine and spirits portfolio grew sales by 3% in the quarter, with its recently acquired Meiomi wine brand increasing 80% in IRI channels.
“[Our] wine and spirits business significantly improved margins driven by the Meiomi wine acquisition, as well as favorable mix trends and COGS benefits, while the Canadian business posted solid results, gaining dollar share across major market segments,” said Rob Sands, president and chief executive officer, Constellation Brands.
Despite single digit growth across its portfolio, Constellation said it was impacted by “unfavourable currency” changes.
Free cash flow for the first nine months of fiscal 2016 totaled US$578m as compared to US$209m for the same period last year.
“We are increasing free cash flow guidance for fiscal 2016 to a range of $475 to $525 million,” said David Klein, executive vice president and chief financial officer at Constellation Brands. “The anticipated increase is being primarily driven by higher earnings for the beer business, timing of capital expenditures and lower income tax payments.”
For the fiscal year 2016, Constellation expects its wine and spirits portfolio to report low to mid single-digit net sales and operating income growth.
In August last year, Constellation Brands acquired a minority stake in bottled cocktail brand Crafthouse Cocktails through its new start-up investment arm, Constellation Ventures.
