WEED Canopy Growth Corporation

By Micah Maidenberg 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 9, 2020).

Constellation Brands Inc. said the value of its bet on a Canadian cannabis company fell again in the latest quarter.

The owner of the Corona and Modelo beer brands on Wednesday reported a $534 million decline in the value of its investment in Canopy Growth Corp. tied to weaker share prices for that company. In all, Constellation said its exposure to Canopy sliced a quarter off profit for the company's fiscal third quarter.

Constellation, which in 2018 invested about $4 billion in Canopy, wagering on the future of cannabis-infused drinks and other products, reported a loss in its previous quarter tied to Canopy. Shares of the Canadian firm have lost almost 35% of their value over the past year.

However, the beverage company said its profit and sales gained on stronger demand for its beer. Shares of Constellation rose 4% in premarket trading.

The company reported earnings of $360.4 million for its fiscal third quarter, compared with $303.1 million a year earlier. Its adjusted profit of $2.14 a share surpassed the consensus estimate of $1.82 a share as compiled by FactSet.

Sales rose about 1% to $1.99 billion, a bit more than forecasts.

Beer sales rose 8% to $1.31 billion in the quarter compared with the previous year. Wine and spirits dropped 10% to $689 million, the company said.

Constellation has been rethinking its portfolio amid shifting consumer interest in alcoholic drinks.

The company struck a deal last month to sell its Ballast Point craft-beer brand to a Chicago-area brewer. It plans to launch an alcoholic seltzer to compete with offerings such as Mike's Hard Lemonade Co.'s White Claw.

Constellation also is working to sell a portfolio of wines to E. & J. Gallo Winery. The companies said in December they revised the deal by excluding some brands from the transaction to address concerns the Federal Trade Commission raised during a review.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

January 09, 2020 02:47 ET (07:47 GMT)

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