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Constellation sees rising beer sales, but costs weigh on margins



Strong beer sales offset a decline in sales of wine and spirits

constellation brands
Inc.,


STZ -5.79%

but grape and transportation costs reduced the company's margin

Beer sales increased 1

1% year-on-year to $ 1.38 billion Dollar in Constellation's last quarter, backed by brands like Corona and Modelo.

However, sales of wines decreased by 1.7% to $ 591.8 million, while sales of spirits – a much smaller area compared to beer – fell 8% to $ 80.2 million [19659005] Constellation The lower wine sales attributed to the timing. The comparable quarter a year ago was lifted by a replenishment of its supply of Meiomi wines, which compensated for a deficiency.

While winning the company on Friday, Chief Executive

Rob Sands

The wine sales were weaker than the company would have liked, but added that the wine and spirits declines did not indicate "real cracks in this armor".

"There is nothing that is in conflict with our brands" It has happened in the past, "said Sands.

Despite the declines, the company expects sales to increase by 2% to 4% for the 2005 fiscal year.

Grapes and transportation costs, marketing investments and foreign exchange negatively impacted quarterly operating margins, which declined for both beer and wine and spirits segments.

CFO

David Klein

Www.mjfriendship.de/de/index.php?op…80&Itemid=58 During the telephone conference he said that the foreign exchange trade helped the gross margins in the second quarter, but the transport costs persisted. Englisch: www.mjfriendship.de/en/index.php?op…95&Itemid=55. If operating margins were put under pressure, it would come from marketing costs.

Total revenue increased 6.1% to $ 2.05 billion, while profit increased 87% to $ 743.8 million or $ 3.77 per share.

The stock was down 4.8% on Friday, with stocks trading at $ 221.22. The share fell by 3.2% this year.

Write to Allison Prang at allison.prang@wsj.com


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