Constellation 2Q Results Top View; Stabilization Seen

Constellation Brands Inc. (STZ) reversed a prior-year loss in its fiscal second quarter caused by restructuring charges, as cost cutting and debt-reduction efforts also helped the bottom line.

The biggest global wine maker by volume reaffirmed its full-year earnings forecast, with Chief Executive Rob Sands saying that despite a challenging economic environment, "we are beginning to see some signs of stabilization."

Standard & Poor's Ratings Services last month cited Constellation's improved operating performance and debt reduction when it boosted the company's rating. Constellation Chief Financial Officer Bob Ryder said Thursday the company trimmed debt by more than $155 million during the quarter by more than $1 billion for far this fiscal year.

S&P has also expected the wine maker to see continued improvement despite the economy's woes. Constellation, whose recent weak results have tested its recession-resistant reputation, has cut jobs and is revamping its international operations amid weakness at its U.K. and Australian businesses.

For the period ended Aug. 31, the provider of Mondavi wines and Corona beers swung to profit of $99.7 million, or 45 cents a share, from a year-earlier loss of $22.7 million, or 11 cents a share. Excluding restructuring and other charges, earnings rose to 54 cents from 45 cents.

Net sales dropped 8.3% to $876.8 million. Sales excluding acquisition, divestiture and currency impacts rose 4%.

Analysts polled by Thomson Reuters expected earnings, excluding items, of 41 cents on revenue of $834 million.

Gross margin rose to 35.3% from 32% amid the cost cutting.

Branded wine sales, which represent the bulk of its earnings, rose 2% excluding currency changes. Spirits surged 49% excluding divestitures strong sales of the Svedka vodka brand.

Shares of Constellation closed Wednesday at $15 and haven't traded premarket. The stock is down 30% the past year.

-By Mike Barris, Dow Jones Newswires; 212-416-2330; [e-mail];