Constellation Brands results miss estimates; outlook cut
Constellation Brands Inc on Thursday reported a lower-than-expected quarterly profit, and the alcoholic beverage maker reduced its full-year free cash flow forecast due to a brewery expansion in Mexico.
The company, which sells Corona and Modelo beer in the United States, said net income fell to $196 million, or 98 cents per share, in the second quarter ended Aug. 31 from $1.5 billion, or $7.74 per share, a year earlier.
The year-earlier quarter included a $1.6 billion non-cash gain from the acquisition of Grupo Modelo's U.S. beer business from Anheuser-Busch InBev.
Excluding a charge for recalling defective bottles of Corona Extra and other special items, Constellation's earnings were $1.11 per share. Analysts on average were expecting $1.15, according to Thomson Reuters I/B/E/S.
Net sales rose 10 percent to $1.61 billion on an increase in Constellation's beer business, but fell short of analyst estimates of $1.64 billion.
Shares of Constellation fell 1.8 percent to $83.74 in morning trading.
The company, whose brands also include Svedka vodka and Robert Mondavi wine, earlier on Thursday announced a joint venture with Owens-Illinois Inc to produce glass in Mexico. It also said it would acquire a glass plant and associated warehouse, land and rail infrastructure in Nava from Anheuser-Busch InBev for about $300 million pending U.S. Department of Justice and Mexican regulatory approvals.
The company is planning a 5 million hectoliter expansion at its Nava brewery. The defective bottles that Constellation voluntarily recalled came from that brewery and were made by a third-party manufacturer.
Constellation lowered its free cash flow projection for the year to reflect the brewery expansion and joint venture. It now expects $275 million to $350 million for fiscal 2015, down from its previous estimate of $425 million to $500 million.