Constellation sees 24% net sales increase

Constellation Brands has reported a 24% increase to net sales in its 2015 end of year results, largely propelled by its Mexican beer business.

140819-corona-beer-mn-1300_dfec6678eb1db10ff7ecda616c28d611Net sales increased by 24% to US$6 billion in the 2015 fiscal year while net income climbed 39%, prompting the company to announce its intention to pay its first ever quarterly dividend to investors since the company went public in 1973.

Constellation completed its acquisition of Gruppo Modelo’s US beer business from AB InBev for $4.75 billion in June 2013, giving it control of US imports of Corona and Modelo Especial. The company now appears to be reaping the rewards of the deal.

“Our beer business delivered strong marketplace results and enhanced market share throughout the year driven by Modelo Especial, Corona Extra and Modelo Especial Chelada,” said Rob Sands, president and CEO of Constellation Brands.

Net sales for beer grew 12% due to “volume growth and favorable pricing”, compared to wine and spirits which saw net sales increase by just 1%.

“While we did not achieve our overall wine market share goals for the year, we improved product mix and posted strong depletion trends for some of our fastest-growing wine brands, including Kim Crawford, Mark West, Ruffino, Black Box, Simi, Nobilo and The Dreaming Tree”, said Sands.

Its spirits portfolio meanwhile was said to have gained a share in the US category driven by new flavor introductions including SVEDKA Strawberry Lemonade and Mango Pineapple, as well as Paul Masson Grande Amber Peach brandy.

On its decision to pay a quarterly dividend to investors Bob Ryder, chief financial officer of Constellation Brands said: “The beer business acquisition and our organic growth focus across our businesses have strengthened our financial profile and created significant capital allocation flexibility and shareholder return opportunities. We are initially targeting a dividend payout ratio of 25% to 30% of our comparable basis net income. Going forward, we will evaluate opportunities to increase our dividend based on the growth of our net income and free cash flow.”

Constellation intends to pay an initial quarterly cash dividend of 31 cents per Class A share on 22 May.

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