Constellation Brands’ Corona Extra and Modelo Especial continued to outperform the broader U.S. beer industry in the latest quarter, leading the alcoholic-beverage company to issue a rosier outlook for the full fiscal year.
“Our beer business kicked off the summer selling season with strong execution during Cinco de Mayo and Memorial Day,” said Chief Executive Rob Sands in a statement.
Overall, the company’s fiscal first-quarter profit nearly quadrupled, an improvement mostly due to the company’s $4.75 billion deal to buy out Mexican brewer Grupo Modelo’s half of Crown Imports LLC, a joint venture that supplied the U.S. with beers such as Corona. Constellation has owned full control of those brands in the U.S. market for about a year, an acquisition that added $867.7 million in sales for the latest period.
The Mexican-produced beers have outperformed the broader beer industry, which has struggled to maintain market share as wine and spirits gain favor. Constellation Brands now expects the beer segment’s net sales to rise about 10% for the current fiscal year, above the prior outlook of “mid-to-high single digit” growth. The company also raised its overall earnings target.
Net sales for the beer business jumped 14% in the latest quarter, while shipment volume grew nearly 11%. The company’s strong beer sales offset weakness in other pockets of the portfolio: wine sales slid 2%, while spirits sales were down 6%. Constellation’s other brands include Robert Mondavi, Kim Crawford and Mark West wines, as well as Svedka vodka and Black Velvet Canadian whisky.
For the quarter ended May 31, Constellation Brands reported a profit of $206.7 million, or $1.03 per Class A share, up from $52.9 million, or 27 cents per Class A share, a year ago. Excluding tax-related items and other adjustments, profit rose to $1.07 per share from 38 cents. Overall, net sales more than doubled to $1.53 billion.
Analysts surveyed by Bloomberg had projected a profit of 81 cents on $1.29 billion in revenue.
For the full fiscal-year ended Feb. 28, Constellation Brands now sees a profit between $4.10 to $4.25 a share on a comparable basis, up from the prior target of $3.95 to $4.15.