Corona and Modelo drive Constellation's sales, shares rise 8%
(Reuters) - Constellation Brands Inc reported better-than-expected quarterly results and raised its full-year earnings forecast on Friday, boosted by strong demand for its Modelo Especial and Corona Premier beers, sending its shares up 8%. The brewer has added more Mexican beers and in recent quarters, craft beers, to its portfolio to cater to rising demand from younger consumers, helping the company grow sales even as beer demand wanes across the globe
(Reuters) - Constellation Brands Inc reported better-than-expected quarterly results and raised its full-year earnings forecast on Friday, boosted by strong demand for its Modelo Especial and Corona Premier beers, sending its shares up 8%.
The brewer has added more Mexican beers and in recent quarters, craft beers, to its portfolio to cater to rising demand from younger consumers, helping the company grow sales even as beer demand wanes across the globe.
Sales of the company's beers rose 7.4% to $1.48 billion in the first quarter ended May 31. Operating margin in the business increased 150 basis points to 39.3%, benefiting from favorable pricing and a stronger dollar.
For the summer, the brewer has launched Corona Refresca, a malt beverage that comes in tropical flavors.
Constellation, which is shedding 30 of its lower-end wine brands after struggling to grow the business, now expects its "Power brands" wine portfolio, which includes Kim Crawford and Meiomi, to perform well this year.
The company also predicted a slower sales decline for the segment this fiscal year, falling between 20% and 25%. The company had projected a 25% to 30% drop.
"(Constellation's) solid beer gross/op margin beat attests to the strength of STZ's collection of industry-leading Power Brands in the premium segment and strong cost discipline, supporting our confidence that STZ's growth engines are well intact," Wells Fargo analyst Bonnie Herzog said in a note.
Constellation raised its profit expectations for fiscal 2020, and now sees earnings per share on a comparable basis to be in the range of $8.65 to $8.95 from $8.50 to $8.80 earlier.
The brewer posted a net loss in the reported quarter, mainly due to equity losses in Canadian marijuana producer Canopy Growth.
Constellation was one of the early entrants to the growing cannabis industry in 2017 when it took a stake in Canopy Growth.
Excluding one-time items, Constellation earned $2.21 per share, well below analysts' estimates of $2.04 per share, according to Refinitiv IBES data.
Overall, net sales rose 2.5% to $2.10 billion. Analysts had expected net sales of $2.07 billion.
Shares of the Victor, New-York based company, which have gained 17% this year, were trading at $203.1 before the bell on Friday.
(Reporting by Nivedita Balu in Bengaluru; Editing by James Emmanuel and Sriraj Kalluvila)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.