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Shares of Constellation Brands, Inc. (NYSE: STZ ) rose 1% on Thursday, after the company reported earnings results for the fourth quarter of 2023. While the bottom line exceeded projections, the top line fell. The company also raises its dividend every month. Here are the key takeaways from the report:
mixed results
Constellation’s net sales for the fourth quarter of 2023 fell 5% year over year to $1.99 billion, missing the consensus estimate of $2.02 billion. Net income attributable to CBI fell 44% to $223 million, or $1.21 per share, compared to last year. Comparable EPS fell 16% to $1.98 but beat projections of $1.82. EPS, excluding Canopy, was $2.15, also down 16%.
Category performance
Constellation’s beer business saw sales decline 2% to $1.53 billion in Q4 with shipments down 5.4%. Thinning grew by 6.3%, driven by the strong performance of Modelo Especial and Corona Extra. Operating margin in this segment decreased by 510 basis points due to higher packaging, raw material, and logistics costs as well as higher SG&A expenses.
Net sales in the wine and spirits division fell 14% YoY to $462.2 million, while organic sales fell 9%. Shipments were down 22% on a reported basis and 19% on an organic basis. The overall decline was down nearly 5% but the company saw strong gains in some higher-end brands such as Kim Crawford, The Prisoner Wine Co. and Casa Noble.
Outlook
For fiscal year 2024, Constellation Brands expects reported EPS to be between $11.60-11.90 while comparable EPS, excluding Canopy, is estimated to be $11.70-12.00. Net sales for the beer business are expected to grow by 7-9% for the year, while operating income is expected to grow by 5-7%. Organic net sales in the wine and spirits division are expected to decline by 0.5% to 0.5% in FY2024 while operating income growth, excluding certain items, is estimated at 2-4%.
Dividends
Constellation’s board of directors declared a quarterly cash dividend of $0.89 per share of Class A Common Stock, representing an increase of 11%, payable on May 18, 2023 to shareholders of record on May 4.
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