Constellation Brands reports strong beer sales but wine struggles, leading to downgrade

From CNBC: 2024-07-03 13:20:51

Constellation Brands reported an earnings beat driven by strength in its beer business, with net sales increasing 6% year over year to $2.662 billion. Adjusted EPS rose 17% to $3.57, exceeding analysts’ expectations. Wine and spirits sales were down 7%, while beer sales grew 8%, led by brands like Modelo and Corona, citing IRI data. The company expects 6-7% net sales growth led by beer for the year. Operating cash flow was light, but dividends and share repurchases continued, with a target net leverage ratio of 3 times by year-end. Management aims to improve the wine-and-spirits business in the coming months, with operational and commercial initiatives underway. Despite beer performance, the stock was downgraded due to continued weakness in the wine-and-spirits segment. Shares fell 4% following the earnings beat, with an initial rise, reflecting investor concerns about the wine business dragging down overall sales. Operating income for the wine-and-spirits segment dropped 25% to $60 million, with lower volumes and higher costs affecting margins. Beer segment results were more positive, with 8% growth in sales year-over-year, and expectations for 6-7% net sales growth for the year driven by continued strength in beer.



Read more at CNBC:: Constellation delivers on beer, but wine weakness prompts downgrade