Constellation Brands (NYSE: STZ) reported its fiscal first quarter earnings on Friday. The Company said that its earnings declined 3% against the same period last year owing to higher interest expenses and onetime expenses. However, company’s adjusted earnings were better than Wall Street’s expectations.
The maker of Robert Mondavi and Ravenswood wines also announced that it plans to acquire remaining 50% stake in Crown Imports LLC- which is a 50:50 % joint venture between Constellation Brands and Grupo Modelo S.A.B de C.V. for $1.85 million. The move is aimed at gaining substantial market share over rivals such as Corona beers and some other breweries.
Following the acquisition announcement, Constellation Brands shares rose sharply.
While company’s earnings for the first quarter stood at $72 million down from $74.5 million, earnings per share rose to $0.38 from $0.35. Analysts surveyed by Thomson Reuters expected earnings of $0.39 per share on revenue of $646.64 million.
After adjusting for onetime expenses /revenues, company’s earnings were $76.0 million or $0.40 per share, against $84.1 million or $0.39 per share in the previous year.
The drop in the adjusted results was driven mainly due to promotional spending and higher marketing expenses. In addition, interest expense also increased 14% to $51 million, primarily due to higher average borrowings and higher borrowing costs.
Net sales fell a bit to $634.8 million from $635.3 million.
For the fiscal year 2013, the company maintained its full-year earnings guidance between $1.89 and $1.99 per share and comparable earnings forecast of $1.93 to $2.03 per share; Street’s analysts are expecting for $2.00 per share. Interest expense is projected to be about $210 million to $220 million.
STZ shares ended the day 24.46% higher at $27.06. The stock touched a new 52-week high of $27.44 in trading today.