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Constellation Brands continues to beat profit estimates

Constellation Brands cheered its investors yet again by beating consensus profits estimates for the three months from March to May. Ron Emler reports.

The company reported a comparable profit of $3.57 per share for the quarter, eclipsing analysts’ estimates of $3.46 per share, and was sufficiently confident to increase its guidance for the remainer of this financial year.

Constellation Brands now expects full-year earnings per share between $14.63 and $14.93, up from its previous outlook of $13.40 to $13.70, based largely on buoyant demand for its Mexican beers, Modelo and Corona.

In its latest quarter it achieved net sales of $2.66 billion, marginally below estimates of $2.67 billion.

Consecutive growth

In its fourteenth consecutive quarter of growth, beer demand rose by 8.3% boosted by wider consumption (sales to distributors were up 7.6%) and benefitting from selective price rises and the results of cost cutting flowing through.

Modelo Especial is now firmly ensconced as America’s biggest beer as measured by dollar sales and Constellation’s operating margin in its beer business rose 260 basis points to 40.6%.

However, in what will be a concerning development for major wines and spirits producers, Constellation reported sluggish demand in line with the American consumer slowdown and switch to beer.

Wine and spirits sales fell by 5.1% compared with the same period last year and moving in line with recent market trends as shown in Brown Forman’s figures for the first quarter.


Constellation said that wines and spirits “continues to face challenging market conditions, primarily in the US wholesale channel across most price segments in the wine category”.

The division’s margins fell by 370 basis points to 15.3% primarily driven by lower volumes and higher cost of goods.

Nevertheless, Chief Executive Bill Newlands was confident about progress in the division

He said: “Our wine and spirits business is making good progress against the operational and commercial execution of initiatives to support its trajectory toward this year’s guidance. All in, we continue to make progress and remain focused on our Fiscal ’25 outlook.”
Constellation predicts almost static net sales in wines and spirits this year and operating income to decline by between 9% and 11%.

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