Constellation Brands (STZ 215.99, -16.35, -7.04%) slid 4.9% in
pre-market after missing earnings estimates for the first quarter.
The producer and marketer of beer, wine, and spirits reported below-consensus first quarter earnings of $2.20/share on a 6.1% year/year increase in revenue to $2.05 bln, which matched expectations.
Looking at the segment breakdown, beer net sales grew 11.0% to $1.38 bln while operating income improved 4.5% to $520.0 mln. Shipment volume grew 8.6% while depletion volume was reported at 8.9%. Modelo and Corona brands were among the top performers. Operating margin declined 230 basis points to 37.8% due to planned marketing investments, higher transportation costs, and unfavorable currency translations.
Wine and spirits net sales declined 2.5% year/year to $672.0 mln while operating income fell 16.8% to $167.8 mln. Shipment volume declined 2.9% while depletion volume declined 3.6% after a strong fourth quarter. Segment operating margin fell 430 basis points to 25.0% due to higher grape prices and higher transportation costs.
The company reaffirmed its guidance for the fiscal year, expecting earnings between $9.40/share and $9.70/share. Constellation Brands expects its beer business to generate net sales and operating income growth between 9% and 11%. Wine and spirits net sales and operating income are expected to grow between 2% and 4% during the fiscal year.
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