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Constellation Brands Delivers ‘Solid Business Performance’ In Q2 

By Dayeeta Das
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Constellation Brands Delivers ‘Solid Business Performance’ In Q2 

Constellation Brands has reported a ‘solid business performance’ in the second quarter of its financial year, generating strong cash flow and achieving debt reduction worth $600 million despite headwinds due to the COVID-19 pandemic.

The company’s operating cash flow amounted to $1.4 billion (+2%), while free cash flow increased by 10% to $1.2 billion.

Comparable operating income for the period amounted to $798 million (+1%), while EBIT (comparable) increased by 3% to $762 million.

However, the company’s comparable net sales declined by 4% year-on-year to $2.26 billion.

The Beer Category

The company, whose portfolio includes the Corona and Modelo brands, saw beer depletion growth of almost 5%, driven by strong demand in off-premise channels. 

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The Corona brand family saw double-digit growth in IRI channels buoyed by the successful launch of Corona Hard Seltzer and the continued growth of Corona Premier and Corona Extra.

Elsewhere, Modelo Especial reported a depletion growth of more than 9% during the quarter to consolidate its position as the third top brand across the beer category in the US.

Wine And Spirits

Constellation Brands’ wine and spirits category posted a strong margin performance and double-digit Power Brand growth in IRI channels. 

The marketplace performance for higher-end wine Power Brands outpaced the total higher-end wine category, driven by double-digit growth for Kim Crawford, Meiomi, and The Prisoner brand family, the company added.

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However, organic net sales in the company's Power Brand division declined by 9% year-on-year to $624.5 million during the quarter.

Operating income increased by 1% to $161.5 million, while operating margin increased 310 basis points to 25.9%.

The company attributed this increase in operating margin to benefits from the mix, lower marketing spend, and prices partially offset by higher COGS (cost of goods sold) and SG&A as a percentage of net sales.

Outlook

Commenting on the company’s outlook, president and CEO of the company, Bill Newlands, said, “Despite the ongoing challenges of the pandemic, we delivered excellent Q2 results, as we continued to invest in brands and capabilities to drive sustainable long-term growth.

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“We remain confident in the resiliency of our business, our brand health and consumer takeaway remain strong, and we are well-positioned to deliver a solid year of organic growth in fiscal [2021].”

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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