Constellation Brands delivers strong second quarter

6th October, 2017 by Nicola Carruthers

US drinks group Constellation Brands has reported strong sales and profits during the second quarter of its financial year, bolstered by the company’s “premiumisation efforts”.

Constellation reports strong growth and profits in its second quarter

Attributing growth largely to the success of its beer business, the Svedka vodka producer saw its net sales rise by 8% to US$2.07bn, while its operating profits increased by 16.9% to US$713.9m.

The company’s portfolio of wine and spirits focus brands – including Black Box, Robert Mondavi Private Selection, Meiomi, Kim Crawford, Woodbridge by Robert Mondavi and Svedka – combined for a 12% depletions gain in the second quarter.

Utah’s High West – which Constellation acquired for US$160 million in October 2016 – saw depletions rise by 37% in the three months through August.

The wine and spirits division reported a net sales increase to 11.7%.

“Our second quarter results are a testament to the fact that our total beverage alcohol (TBA) strategy is paying off,” said Rob Sands, president and CEO.

“We remain the leader in the high-end of the US beer market, and we are reaping the benefits of our Wine and Spirits premiumisation efforts. Strong execution, coupled with smart portfolio and operational investments, continue to fuel our growth and solidify our leadership position across TBA.”

David Klein, executive vice president and CFO, added: “During the quarter, we gained market share, improved margins, continued to generate strong free cash flow and executed exceptionally well. These results are driving the upward revision to our EPS estimate for the year.”

Looking ahead to fiscal 2018, the company expects net sales to decrease in the range of 4-6% and operating income “to be flat”.

The results come on the back of a first quarter in which the group saw its net sales climb 3%, bolstered by “double-digit” sales growth from its spirits portfolio.

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