Constellation climbs after reporting profit and wine sales

Constellation Brands Inc. (STZb.N), the owner of Corona and Modelo beer, beat analysts for the fourth quarter, boosting new CEO Bill Newlands as he transforms the company's alcohol portfolio into a bid for sustained growth.

The company reported comparable earnings per share of $ 1.84, beating analysts' average estimate of $ 1.71.

Key Insights

– The company announced that Wednesday is planning to shed some of its lower wine and liquor brands to focus on several premium lines selling for US $ 1[ads1]1 or higher. Growth in the alcohol industry, like some other consumer segments, has come from customers who trade up to higher-end alternatives. The result of the wines and spirits will fall as much as 35 percent this fiscal year when it throws the assets.

-Newlands, which just took over in March, is under pressure to prove that it can sustain the growth of Constellation's beer business, which is rooted in the Mexican brands. The unit will see a net sales growth of between 7 and 9 per cent in fiscal policy 2020, it says, in line with the targeted high single rate announced in February.

-Constellation increased its profile last year by investing in Canopy Growth Corp., the world's most valuable marijuana company. But there are still early days for that business. Constellation has said that it will be at least a year before the investment of the weeds adds to earnings. Canopy sells pan in Canada and is targeting the US hemp market.

Market reaction

Constellation shares rose 2.7 percent to USD 184.51 at. 9:47 in New York.