FAIRPORT - Constellation Brands Inc., the world's biggest winemaker, posted an 18 percent drop in second-quarter profit Thursday largely because of restructuring charges. It also lowered its fiscal 2007 guidance to reflect heightened competition in Britain. Its shares fell more than 3 percent.
Income available to common shareholders for the June-to-August quarter dipped to $66 million, or 28 cents a share, from $80 million, or 34 cents a share, a year earlier.
Excluding one-time items, the company said per-share profits rose 5 percent to 43 cents a share, matching the consensus estimate of analysts polled by Thomson Financial.
Sales before excise taxes jumped 17 percent to $1.71 billion from $1.47 billion last year, driven by the acquisition of Canadian winemaker Vincor International and growth in base businesses, notably branded wine in North America.
Net sales after excise taxes were $1.418 billion, just ahead of analysts' estimates of $1.409 billion.
The company, which also sells beer and spirits, took a $21.7 million charge to cover restructuring and business realignment costs.
While its acquisition of Vincor International in June helped improve operating margins, that was offset by tougher conditions in British markets. Operating margins in the beer and spirits divisions fell because of higher material costs for spirits and stock-compensation expense.
The company lowered the top end of its 2007 guidance to a range of $1.72 per share to $1.76 per share, due to the “intense competition” in Britain. Previously, it predicted a profit of $1.72 to $1.80. Analysts currently forecast earnings per share of $1.76.
“The stock market will probably focus on the call-down in the top end of the guidance but what people should be focusing on is the strong sales performance,” said Tim Ramey, an analyst for D.A. Davidson & Co. in Lake Oswego, Ore. “I thought the sales performance was quite strong.”
Branded business net sales jumped 20 percent to $1.14 billion, while sales of imported beers rose 9 percent to $342 million.
A 34 percent jump in branded wine sales in North America drove an overall 6 percent increase in branded wine sales on a constant-currency basis. Total spirits sales rose 8 percent in the quarter to $84 million.
Constellation shares fell $1.03, or 3.5 percent, to $28.05 in morning trading on the New York Stock Exchange. They are still trading near the upper end of their 52-week range of $21.15 to $29.09.
Based in suburban Rochester, Constellation has been scooping up alcoholic-beverage businesses since the late 1980s. After a six-month chase, it struck a deal in April to buy Vincor, maker of Inniskillin, Jackson-Triggs and Toasted Head wines, for $1.09 billion.
Constellation acquired Australian vintner BRL Hardy Ltd. for $1.1 billion in cash and stock in 2003 in a deal that made it the world's largest wine business. It jumped further ahead of longtime wine leader E.& J. Gallo Winery of Modesto, Calif., when it bought Robert Mondavi Corp. for $1.3 billion.
Its 200-plus brands range from jug wines to coveted California reds such as Ravenswood and Estancia, beer imports from Corona to St. Pauli Girl, and liquors like Fleischmann's vodka, Skol gin and Black Velvet Canadian whiskey.
Excluding one-time items, the company said per-share profits rose 5 percent to 43 cents a share, matching the consensus estimate of analysts polled by Thomson Financial.
Sales before excise taxes jumped 17 percent to $1.71 billion from $1.47 billion last year, driven by the acquisition of Canadian winemaker Vincor International and growth in base businesses, notably branded wine in North America.
Net sales after excise taxes were $1.418 billion, just ahead of analysts' estimates of $1.409 billion.
The company, which also sells beer and spirits, took a $21.7 million charge to cover restructuring and business realignment costs.
While its acquisition of Vincor International in June helped improve operating margins, that was offset by tougher conditions in British markets. Operating margins in the beer and spirits divisions fell because of higher material costs for spirits and stock-compensation expense.
The company lowered the top end of its 2007 guidance to a range of $1.72 per share to $1.76 per share, due to the “intense competition” in Britain. Previously, it predicted a profit of $1.72 to $1.80. Analysts currently forecast earnings per share of $1.76.
“The stock market will probably focus on the call-down in the top end of the guidance but what people should be focusing on is the strong sales performance,” said Tim Ramey, an analyst for D.A. Davidson & Co. in Lake Oswego, Ore. “I thought the sales performance was quite strong.”
Branded business net sales jumped 20 percent to $1.14 billion, while sales of imported beers rose 9 percent to $342 million.
A 34 percent jump in branded wine sales in North America drove an overall 6 percent increase in branded wine sales on a constant-currency basis. Total spirits sales rose 8 percent in the quarter to $84 million.
Constellation shares fell $1.03, or 3.5 percent, to $28.05 in morning trading on the New York Stock Exchange. They are still trading near the upper end of their 52-week range of $21.15 to $29.09.
Based in suburban Rochester, Constellation has been scooping up alcoholic-beverage businesses since the late 1980s. After a six-month chase, it struck a deal in April to buy Vincor, maker of Inniskillin, Jackson-Triggs and Toasted Head wines, for $1.09 billion.
Constellation acquired Australian vintner BRL Hardy Ltd. for $1.1 billion in cash and stock in 2003 in a deal that made it the world's largest wine business. It jumped further ahead of longtime wine leader E.& J. Gallo Winery of Modesto, Calif., when it bought Robert Mondavi Corp. for $1.3 billion.
Its 200-plus brands range from jug wines to coveted California reds such as Ravenswood and Estancia, beer imports from Corona to St. Pauli Girl, and liquors like Fleischmann's vodka, Skol gin and Black Velvet Canadian whiskey.
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