Constellation Brands Inc. (STZ) reversed a prior-year loss in
its fiscal second quarter caused by restructuring charges, as cost
cutting and debt-reduction efforts also helped the bottom line.
The biggest global wine maker by volume reaffirmed its full-year
earnings forecast, with Chief Executive Rob Sands saying that
despite a challenging economic environment, "we are beginning to
see some signs of stabilization."
Standard & Poor's Ratings Services last month cited
Constellation's improved operating performance and debt reduction
when it boosted the company's rating. Constellation Chief Financial
Officer Bob Ryder said Thursday the company trimmed debt by more
than $155 million during the quarter by more than $1 billion for
far this fiscal year.
S&P has also expected the wine maker to see continued
improvement despite the economy's woes. Constellation, whose recent
weak results have tested its recession-resistant reputation, has
cut jobs and is revamping its international operations amid
weakness at its U.K. and Australian businesses.
For the period ended Aug. 31, the provider of Mondavi wines and
Corona beers swung to profit of $99.7 million, or 45 cents a share,
from a year-earlier loss of $22.7 million, or 11 cents a share.
Excluding restructuring and other charges, earnings rose to 54
cents from 45 cents.
Net sales dropped 8.3% to $876.8 million. Sales excluding
acquisition, divestiture and currency impacts rose 4%.
Analysts polled by Thomson Reuters expected earnings, excluding
items, of 41 cents on revenue of $834 million.
Gross margin rose to 35.3% from 32% amid the cost cutting.
Branded wine sales, which represent the bulk of its earnings,
rose 2% excluding currency changes. Spirits surged 49% excluding
divestitures strong sales of the Svedka vodka brand.
Shares of Constellation closed Wednesday at $15 and haven't
traded premarket. The stock is down 30% the past year.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com;