Constellation Brands (NYSE:STZ) disclosed on Thursday a stronger-than-expected 52% climb in fiscal first-quarter profits, prompting the worlds leading premium wine company to stand by its 2012 financial guidance.
However, the Victor, N.Y.-based seller of Svedka vodka and Robert Mondavi wine disclosed slumping sales and unveiled an unspecified restructuring effort.
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Constellation, which also imports Corona through its Crown joint venture, said it earned $74.5 million, or 35 cents a share, last quarter, compared with a profit of $49.1 million, or 22 cents a share, a year earlier. Excluding one-time items, it earned 39 cents a share, exceeding consensus calls from analysts by 2 cents.
Due to the sale of its Australian and U.K. wine business, revenue declined 19% to $635.3 million, but still managed to top the Streets view of $629 million.
Highlights for the quarter include greatly improved operating margin and favorable U.S. product mix, strong free cash flow and ongoing debt reduction, CEO Rob Sands said in a statement. We believe focused marketing efforts at Crown are driving momentum in the beer business."
Despite declining sales, Constellation said it still sees fiscal 2012 non-GAAP EPS of $1.90 to $2.00, compared with estimates on Wall Street for $1.97.
Yet Constellation said it plans to implement a restructuring initiative to gain efficiencies, but didnt spell out specific moves in its release.
With the sale of our Australian and U.K. business, we have significantly improved our financial profile and simplified our business, said Sands. As a result, we are taking the next logical step to increase efficiencies and streamline our operations worldwide." Shares of Constellation gained 1.34% to $21.25 ahead of Thursdays opening bell.