Corona maker Constellation to sell about 30 brands for $1.7 bln

Bottles of Constellation Brands Inc. Corona beer sit in the cooler of a bar in Ottawa Illinois U.S. on Tuesday

Net sales from wine and spirits are expected to fall 25-30% and operating income to drop 30-35% in fiscal 2020, following the sale.

Constellation Brands' sales grew 2.0% year-over-year to ~$1.80 billion in the quarter and exceeded analysts' expectation of $1.74 billion. Its high-quality, premium wine and spirits brands include the Robert Mondavi and The Prisoner Wine Company brand families, Kim Crawford, Ruffino, Meiomi and SVEDKA Vodka.

Profit rose to $1.24 billion, or $6.37 a share, up from $910.5 million, or $4.56 a share, a year earlier.

The company reported comparable earnings per share of US$1.84, beating analysts' average estimate of US$1.71. TIAA CREF Investment Management LLC now owns 1,299,152 shares of the company's stock valued at $280,123,000 after acquiring an additional 644,939 shares during the last quarter.

For fiscal 2020, the company guided adjusted earnings per share of $8.50 to $8.80.

The company has transformed itself over the past decade from a boxed-wine seller to a beverage giant brewing Corona and craft beers. It has also invested almost $4 billion in Canopy Growth, Canada's largest cannabis producer.

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Constellation Brands (NYSE:STZ) said on Wednesday it would sell about 30 of its low-end wine and spirits brands to E. & J. Gallo Winery for $1.7 billion, as the Corona beer maker focuses on more profitable brands.

In 2016, the company divested its Canadian wine business to Ontario Teachers' Pension Plan for about 1.03 billion Canadian dollars (772 million USA dollars). The company has a current ratio of 1.08, a quick ratio of 0.43 and a debt-to-equity ratio of 1.02.

"Canopy's business is rapidly evolving and their financial results will likely be volatile as they invest behind their growth opportunities", Constellation Brands chief financial officer David Klein said on the call.

Constellation Brands is reporting a strong end to its fiscal year with the latest quarterly earnings.

The company also expects to record a restructuring charge in the current quarter after developing the cost-reduction plan.

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