Constellation Brands has raised its annual profit target after higher prices and strong demand for its beers and spirits drove a sales and profit beat in the second quarter.
Alcohol producers such as Constellation and peer Brown-Forman have benefited from increasing prices, helping offset steeper raw material costs.
Constellation also raised the annual sales forecast for its beer business. Its Modelo Especial and Corona brand beers and premium wine labels such as Meiomi and Kim Crawford retained demand despite a broader consumer slowdown in the US due to sticky inflation.
Still, the Rochester, New York-based company's shares were down 1.9% in early trade, as its overall wine business suffered softer demand.
Modelo Especial's dollar share at retail outlets was 8.5%, while that of Anheuser-Busch InBev's Bud Light was 8.1% this year, until the week ending 16 September, according to consulting company Bump Williams, which sources data from NielsenIQ.
Constellation now expects fiscal 2024 comparable earnings per share between $12.00 and $12.20, as against its previous forecast of profit between $11.70 and $12.00 per share.
However, CFRA Research analyst Garrett Nelson said the forecast raise was modest, and hinted that the company's earnings expectations for the final two quarters might have been lowered slightly.
Constellation's quarterly sales rose 7%, to $2.84 billion, compared with analysts' average estimate of $2.82 billion, as per IBES data from LSEG.
In July of this year, the company announced that Rob Sands will retire from his role as the chair of its board of directors and will not stand for re-election following the company’s annual meeting of stockholders.
Under Sands’ leadership, Constellation Brands achieved significant growth to become one of the leading beer suppliers in the high-end of the US beer market.
The company also elected Luca Zaramella, the chief financial officer of Mondelēz International, and William (Bill) T Giles, the former chief financial officer of AutoZone, to its board of directors.