Constellation Brands' sales fall but profits jump

ROCHESTER, N.Y. — Constellation Brands Inc., which sells Robert Mondavi wine, Svedka vodka and Corona beer, said Thursday its third-quarter net income more than tripled as it took fewer charges and benefited from a lower tax rate.

The world's biggest winemaker, which is undergoing a restructuring that includes the sale of most of its Australian and British wine business, boosted its full-year profit outlook.

Revenue fell 2 percent to $966.4 million as wine sales, which account for more than 90 percent of its revenue, remained weak. But the Victor, N.Y.-based company saw stronger beer and spirits sales.

For the quarter ended Nov. 30, Constellation Brands earned $139.3 million, or 65 cents per share. That compared with earnings of $44.1 million, or 20 cents per share, in last year's September-November period when it took $81 million in restructuring, acquisition and other charges.

Excluding costs from a cider business sale, it earned 66 cents per share. Wall Street was looking for 61 cents a share, according to FactSet.

The company now expects full-year earnings of $1.80 to $1.85 per share, up from its previous forecast of $1.63 to $1.78 per share.

Its effective tax rate for the quarter fell to 29 percent from 35 percent in last year's third quarter. It now anticipates a full-year rate of 31 percent.

Wine sales fell 3 percent to $911 million. Revenue in North America edged up 1 percent to $676 million but sales in Europe and Australia slumped 12 percent to $235 million.

Spirits sales rose 8 percent to $55 million, and operating earnings from Crown Imports, its beer joint venture, jumped 27 percent to $58 million.

Constellation Brands is offloading 80 percent of its Australian and British wine business to an Australian private equity firm. The proposed $230 million sale, expected to be completed in February, would shrink it down to No. 2 in the global winemaker rankings behind E. & J. Gallo Winery of Modesto, Calif.

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