Oct 6 (Reuters) – Constellation Brands beat second-quarter estimates for profit and sales on Tuesday, as resilient demand for its beer such as Modelo Especial and Victoria helped offset challenges facing the alcohol industry in a soft spending environment.
The company also said it has bought SpikedAde, a vodka-based ready-to-drink (RTD) beverage company, for at least $75 million, as part of its strategy to expand into new demand areas and strengthen its position in the fast-growing RTD category.
• The company will pay $75 million at the closing of the deal for SpikedAde, and up to an additional $278 million over five years contingent to the brand’s performance as well as Constellation’s capital-allocation priorities.
• Constellation’s beer business benefited from major sporting events this year, as the FIFA World Cup and NBA Finals spurred watch parties and social drinking occasions.
• Net sales for the quarter ended August 31 rose 6% to $2.63 billion, while analysts, on average, estimated $2.54 billion, according to data compiled by LSEG.
• It earned $3.74 per share on an adjusted basis during the quarter, compared with the estimate of $3.56.
• Its wine and spirits business reported a 17% increase in quarterly net sales, while the beer segment posted a 5% rise.
• Constellation reaffirmed its fiscal 2027 forecast for adjusted earnings at $11.20 to $11.90 per share, and organic net sales in the range of 1% decline to 1% growth.
• The company lowered its annual operating margin forecast to 31% to 32%, from its prior forecast of 32% to 33%.
• Its shares were down 4.5% in extended trading. They have fallen about 16% so far this year.
• The company withdrew its fiscal 2028 forecast in April, citing a volatile operating environment and a limited near-term visibility.
(Reporting by Angela Christy in Bengaluru; Editing by Shilpi Majumdar)
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