Constellation Brands, the maker of Corona beer, exceeds market expectations in the second quarter thanks to strong demand

Reuters, October 6 - Constellation Brands STZ.N on Tuesday reported second-quarter profit and sales that both exceeded market expectations, thanks to strong demand for its beer products such as Modelo Especial and Victoria, which effectively offset challenges facing the alcohol industry amid weakened consumer spending.

The company also said it had acquired SpikedAde, a ready-to-drink (RTD) beverage company based on vodka, for at least $75 million, as part of its strategy to expand into new demand areas and consolidate its position in the fast-growing RTD category.

• The company will pay $75 million upon closing the SpikedAde transaction and up to an additional $278 million over the next five years, depending on the brand’s performance and Constellation Brands’ capital allocation priorities.

• Constellation Brands’ beer business benefited this year from major sporting events, with the FIFA World Cup and NBA Finals driving an increase in watch parties and social drinking occasions.

• According to data compiled by London Stock Exchange Group (LSEG), quarterly net sales for the period ended August 31 rose 6% to $2.63 billion, while analysts on average expected $2.54 billion.

• Adjusted earnings per share for the quarter were $3.74, higher than the expected $3.56.

• Its wine and spirits business saw quarterly net sales rise 17%, while the beer business grew 5%.

• Constellation Brands reiterated its fiscal 2027 outlook: Adjusted earnings per share between $11.20 and $11.90, with organic net sales expected to range from a 1% decline to 1% growth.

• The company lowered its annual operating margin forecast to between 31% and 32%, from the previous 32% to 33% expectation.

• Its share price dropped 4.5% in after-hours trading. Year to date, the stock is down about 16%.

• The company withdrew its fiscal 2028 outlook in April (link), citing a volatile operating environment and uncertain short-term prospects.

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