Corona Beer Maker Constellation Brands Beats Profit Forecasts, Holds Back Guidance

Constellation Brands declines to offer guidance due to the impact of the coronavirus pandemic.
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Constellation Brands  (STZ) - Get Report, brewer of Corona beer, beat Wall Street's fourth-quarter earnings and revenue expectations but declined to offer guidance due to the impact of the coronavirus pandemic.

Shares of the Victor, New York-based company were rising 2.4% to $133.89 in premarket trading.

Constellation Brands reported fourth-quarter net income of $398.4 million, or $2.04 a share, compared with $1.239.5 billion, or $5.87 a share, a year ago. Adjusted earnings were $2.06, beating FacSet's call for $1.64.

Sales totaled $1.903 billion, up 6% from a year ago and ahead of the $1.836 billion FactSet consensus.

"In this time of uncertainty, we believe we have ample liquidity and financial flexibility and remain committed to our investment grading," Chief Financial Officer Garth Hankinson said in a statement. "We have significant capacity under our $2 billion revolving credit facility and we plan to carefully manage our debt position over the next 24 months."

Hankinson said the company expects to receive about $850 million in cash from the closing of the sale of its Gallo wines and "we remain focused on prudently navigating the challenging operating environment presented by Covid-19."

During the fourth quarter, Constellation’s beer business posted import beer depletion growth of 11.4% and overall depletion growth of 10.8% driven by the Modelo and Corona brands. Depletion refers to the total number of cases sold by a distributor to retailers.

The Modelo brand grew depletions more than 18% while the Corona Brand Family grew nearly 5%.

Fiscal 2021 guidance, the company said, "is unavailable at this time due to potential impacts on the business from Covid-19."

Constellation Brands took a loss of $31.78 million on its investment in Canadian cannabis company Canopy Growth (CGC) - Get Report in the fourth quarter and a loss of $575.9 million on the year.

Last month, Canopy Growth said it was planning to take a C$700 million to C$800 million ($523M to $598M) charge in connection with the closure of two of its greenhouse facilities and the elimination of 500 jobs.

U.S. alcoholic-beverage sales soared 55% in the third week of March from the year-earlier week, according to research firm Nielsen. That was the week in which several states locked down their residents with shelter-in-place orders in response to the coronavirus outbreak.