Dive Brief:
- Constellation Brands reported strong fourth-quarter earnings, according to a company release.The beer, wine and spirits distributor posted net income of $452 million compared to $296 billion in the year-ago period, and sales of $1.63 billion, which topped analyst expectations.
- Constellation also expects earnings per share of $7.65 to $7.95 and comparable-basis EPS of $7.70 to $8.00, according to the company's outlook for fiscal 2018.
- Beer sales increased 17%, and wine and spirits sales rose 6%."Our beer business continues to be a powerhouse for growth. We exceeded our profit and margin goals for the year," Rob Sands, president and CEO of Constellation Brands, said.
Dive Insight:
While these positive earnings suggest continued growth for Constellation, the largest American distributor of Mexican beer, President Trump's attitude toward the country could still create obstacles for the company. Nearly all of Constellation's beer is imported from Mexico, including Corona. A tariff on Mexican imports would hike prices and could send consumers flocking toward cheaper alternatives.
Constellation investors should watch Trump's moves on tariffs and trade regulations regarding Mexican-made products, but they shouldn't lose confidence in the company altogether. Constellation's stock has recovered in recent months after dipping after Election Day, and the alcohol distributor has seen strong gains for its beer business. Shares of the company surged $12.11, or 7.5%, to $173.50 following the earnings release on Thursday morning.
Constellation is the leading growth contributor to the U.S. beer industry for the fiscal year, according to the company's earnings report, and holds many of the America's top imported beers in its portfolio.
Some of this growth was driven by the company's acquisition of American brewery Ballast Point, which it closed for nearly $1 billion in 2015, gaining entry into the growing craft beer space. Wine and spirits sales were weakened somewhat by the company's divestiture of Canadian wine maker Meiomi, which the company also acquired in 2015, but still managed a 6% gain.