Constellation delivers steady FY sales growth

Constellation Brands witnessed a 3% net sales lift in its 2017/18 fiscal year, with the company’s wine and spirits arm bolstered by its “innovation efforts”.

Svedka vodka producer Constellation Brands witnessed a 3% sales increase in 2017/18

In the 12 months to 28 February 2018, the Svedka vodka maker saw its net sales reach US$7.5 billion and its operating income increase by 13% to US$2.4bn.

However, the wine and spirits arm’s net sales fell by 5.7% to US$2.9bn.

Excluding the impact of the sale of its Canadian wine business, net sales and operating income of the group’s wine and spirits business grew by 5% and 7%, respectively.

The company attributed the sales increase to its “innovation efforts”, including its Svedka Vodka Blue Raspberry.

Constellation also reported net sales growth of 7.6% for wines and spirits during its fourth quarter.

“Execution of our total beverage alcohol premiumisation strategy for fiscal 2018 produced best-in-class EPS growth of almost 30% as we continued to grow overall market share and improve margins across the business,” said Rob Sands, chief executive officer.

“We expect to capitalise on this momentum, as we are targeting impressive sales and earnings growth for the coming year.”

Looking ahead, the company expects net sales and operating income growth for the wines and spirits business to be in the range of 2-4%.

David Klein, executive vice president and chief financial officer, added: “Fiscal 2018’s exceptional financial growth and record operating cash flow provided flexibility to return more than US$1.4bn to shareholders through a combination of share repurchases and dividend.

“Our strong financial profile and future business prospects provide us the confidence to increase our dividend by more than 40%. Savings from the US tax reform will be used to make smart investments to fuel growth in the coming year.”