Although Constellation Brands Inc. (NYSE: STZ) reported on Wednesday that its fiscal fourth-quarter profit shrank 21% from year-earlier quarter mainly due to higher taxes and rise in expenses, adjusted earnings edged past street’s estimate as top line growth was bolstered by strong sales of wines and spirits while its recent acquisition also helped driving up the revenue.
The Company said that sales of wines and spirits jumped 8% (excluding the impact of currency fluctuations) while total shipment volume soared 7.3%, in the fiscal fourth quarter.
Shares edged up in early trading hours.
For the fiscal fourth quarter ended February 28, Constellation Brands reported a profit of $81.7 million or 43 cents a share compared to net profit of $103.0 million or 51 cents a share, in the same quarter of last year.
Stripping out onetime items such as restructuring related costs and a write-off related to financing cost, adjusted earnings came at 47 cents a share, which 2 cents higher than analysts’ consensus estimate, according to a data compiled by Thomson Reuters.
Net sales during the quarter (excluding excise taxes) jumped to $695.9 million from $628.1 million, in the year earlier quarter.
Gross margin contracted to 37.6% from 39% as input costs soared 13%.
Shares of Constellation Brands jumped more than two times since last June when the Company first indicated that it would acquire 50% stake in Mexican brewer, Grupo Modelo’s Crown Imports LLC.
Nonetheless, the deal was stuck after Anheuser-Busch InBev NV proposed $20.1 billion for buying Grupo Modelo forcing the Justice Department to stop merger fearing about competition, which prompted Constellation Brands to sweeten the deal (Constellation Brands agreed to buy a brewery in Mexico and a license to make company’s beers on an ongoing basis).
Just last week, the Justice Department and InBev announced they have agreed in principle to an agreement which would allow Constellation Brands to proceed with a larger deal.
On Wednesday, Constellation Brands said that Crown Imports deal might close by the end of the current quarter or “shortly thereafter”. Should the acquisition is completed by that time then adjusted full-year earnings could be in the range of $2.55 to $2.85 a share, the company said. Analysts are expecting full-year earnings at $2.78 a share.
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