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Constellation sees U.S. wine sales jump 17 percent

ROCHESTER, N.Y. — The maker of Robert Mondavi wine and Svedka vodka posted a $279.8 million fourth-quarter profit Thursday, recovering from a year-ago loss as it saw a double-digit rise in wine sales in North America.

Constellation Brands Inc. said its revenue in the December-to-February period edged up 1 percent to $715.3 million. The effect of offloading the bulk of its Australian and British wine business largely offset a 17 percent jump in wine sales in the key North American market.

The results beat Wall Street expectations, and the company also forecast improved earnings in the current fiscal year.

Constellation shares rose $1.01, or 5 percent, to $21.39 in morning trading Thursday. The stock is trading at the upper end of a 52-week range of $14.97 to $22.52.

"We believe (the company's) core business is improving, and is beginning to reflect the strength of the wine category," UBS analyst Kaumil Gajrawala said in a note to clients.

Sales of the company's Corona and other imported beers surged 15 percent. Spirits sales rose 3 percent, driven by strong gains for Svedka.

Boosted by volume growth, operating earnings from Crown Imports, its beer joint venture with Mexican brewer Grupo Modelo SA, rose 18 percent to $97 million on sales of $480.4 million.

Net income for all of Constellation Brands equaled $1.32 per share. A year earlier, the company lost $51 million, or 23 cents a share, on sliding sales of spirits and beer and lingering weakness in the U.S. wine market.

Excluding items, the Victor, N.Y., company earned 35 cents per share. Wall Street expected 26 cents a share, according to FactSet.

The company said its board of directors authorized a $500 million share repurchase program "to provide flexibility over a multi-year period." In January, Constellation Brands lost its eight-year-long status as the world's No. 1 winemaker when it sold 80 percent of its Australian and British wine business to an Australian private equity firm for $230 million. It recorded a net pre-tax gain of $84 million and a net tax benefit of $198 million related to the divestiture.


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