Constellation Brands Swung to 2Q Loss Driven by Cannabis Venture

By Sabela Ojea

Constellation Brands Inc. swung to a loss in the fiscal second-quarter over its investment in the cannabis venture Canopy Growth Corp.

The brewer of Corona beer for U.S. consumers on Thursday said it recorded a loss for the three months ended Aug. 31 of $1.15 billion, or $6.30 a share, compared with a profit of $1.5 million, or 1 cent a share, a year earlier.

Stripping out one-time items, including Canopy's losses, Constellation's adjusted earnings per share were $3.17. Analysts surveyed by FactSet had forecast adjusted earnings of $2.82 per share.

Constellation Brands, which owns 36% of Canopy's total shareholding and is the cannabis company's top stakeholder, said it booked a $1.06 billion impairment charge for the quarter for Canopy after evaluating the equity -method investment in the company. Excluding Canopy, Constellation Brands said per-share earnings for the quarter would have been $3.33.

The alcoholic-beverages company's net sales rose 12% to $2.86 billion, or $2.66 billion after excise taxes. Analysts surveyed by FactSet had been forecasting sales of $2.51 billion.

Beer sales for brands such as Corona and Modelo grew 15% year-over-year to $2.14 billion for the fiscal quarter, the company said, adding that it plans to invest in its Mexico-based capacity to support long-term growth across its high-end Mexican beer portfolio.

Constellation's wine and spirits sales increased slightly to $515.8 million from $509.8 million, the company said.

The board declared a quarterly cash dividend of 80 cents a share.

Constellation Brands on Thursday also said it has agreed to sell to the Wine Group LLC some of its mainstream and premium wine brands, including "Cooper & Thief" and "the Dreaming Tree," as it shifts its strategy toward fine wine brands and craft spirits.

Write to Sabela Ojea at [e-mail]

(END) Dow Jones Newswires

October 06, 2022 09:01 ET (13:01 GMT)

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