Constellation Brands Inc.'s (STZ) reported a 52% jump in fiscal first-quarter profit as the alcoholic-beverage company continued a heavy focus on cost-reduction and efforts to streamline its business, offsetting a decline in sales.
"With the sale of our Australian and U.K. business, we have significantly improved our financial profile and simplified our business. As a result, we are taking the next logical step to increase efficiencies and streamline our operations worldwide," said Constellation Chief Executive Rob Sands.
The company said it expects to incur one-time cash charges, nearly all of them during fiscal 2012, in relation to ongoing operational changes.
Emerging from a brutal economic downturn, which saw many consumers opt for cheaper options and choose to entertain at home rather than bars and restaurants, Constellation has worked to thin operations and capitalize on rising demand in emerging markets like China.
Constellation posted a profit of $74.5 million, or 35 cents a share, compared with a year-earlier profit of $49.1 million, or 22 cents a share. Excluding items such as restructuring charges, the company earned 39 cents a share.
Net sales, which exclude excise taxes, fell 19% to $635.3 million, due primarily to the divestiture of the company's Australian and U.K. wine business. In January, Constellation sold a controlling stake in its Australian and U.K. operations to CHAMP Private Equity.
Analysts most recently predicted earnings of 37 cents on $629 million in net sales.
Meanwhile, product costs declined 26% to $384.3 million, as overhead costs dropped 18% to $138.2 million.
At Crown Imports, Constellation's beer joint venture with Grupo Modelo SAB de CV (GPMCY, GMODELO.MX), net sales and operating profit rose 9% and 10%, respectively, as the rollout of its Victoria brand offset increased marketing expenses. Constellation had previously said its fiscal 2012 forecast was "tempered" by items including higher incremental marketing costs for Crown, which promotes brands such as Corona, Modelo Especial and Tsingtao in the U.S.
Shares of Constellation, which affirmed its full-year guidance, closed at $20.97 Wednesday and were inactive premarket. The stock is down 5.3% since the start of the year.
-By Mia Lamar, Dow Jones Newswires; 212-416-3207; firstname.lastname@example.org