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Constellation US arm posts fourth quarter profit

Constellation Brands has posted a fiscal fourth-quarter profit of US$279.8 million, reversing a year loss as it posted strong wine sales in North America.

The company’s revenue rose 1% to US$715.3m, while spirits sales were up 3%.

Constellation, whose brands include Robert Mondavi and Ravenswood wines and Svedka vodka, was until recently the world’s largest winemaker by sales.

In January, the company sold a controlling stake in its Australian and UK operations to CHAMP Private Equity. It now stands at number two in the global rankings, behind privately held E& J Gallo Winery.

The latest quarter shows improved sales in the core US business, which the company attributed to higher volumes and better product mix. "The consumer is definitely back," said chief executive Rob Sands.

After cutting down on promotions for its lowest-cost products to improve margins, Constellation now will take "selective" price increases on value and specialty wines, Sands said.

At Crown Imports, Constellation’s beer joint venture with Grupo Modelo, net sales and operating profit rose 15% and 18% respectively.

Meanwhile, net sales in Australia and Europe plunged 37%, but earnings increased 19%.

Lucy Shaw, 11.04.2011

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