Constellation Brands has released on Friday its fiscal first quarter results, posting a USD78 million loss related to its share of the results of Canadian cannabis company Canopy Growth Corp. However, the stake in Canadian cannabis producer Canopy Growth Corporation was reported as a USD1.6bn “unrealised gain” and earnings on beer, wine and spirits were strong and the company could raise its outlook for the rest of the year.
The later than planned sale of a portion of its wine and spirits business to E. & J. Gallo Winery, which had been pushed from the first to the second half of the year also helped to lift earnings. In April, Constellation announced to discontinue 40% of its non-beer business by selling more than 30 wine and spirits brands, along with six winemaking facilities located in California, Washington, and New York (inside.beer, 9.4.2019).
“In Q1, we continued to deliver strong operating results. We achieved operating cash flow of almost 20% and increased our EPS and cash flow projections due to the revised timing of the wine and spirits transaction,” said David Klein, Chief Financial Officer of Constellation Brands. “In addition, the recent revision to the duration of Canopy Growth warrants provides incremental long-term flexibility for cash deployment to shareholders,” he said.
“As we kick off fiscal 20, I’m pleased with our strong start to the year,” said Bill Newlands, president and CEO of Constellation Brands. “Our wine and spirits transformation strategy is working, led by our collection of power brands, which delivered industry leading depletion growth of 4% during the quarter.”