Constellation Brands pares forecast
NEW YORK (Reuters) - Constellation Brands Inc <STZ.N>, the world's largest branded wine-maker, pared its 2008 earnings outlook on Tuesday due mostly to acquisition-related costs.
The owner of Robert Mondavi, Ravenswood, Vendange and other brands said net income for the fiscal third quarter ended November 30 was $119.6 million, or 55 cents per share, compared with $107.8 million, or 45 cents per share, a year earlier.
Analysts on average were expecting 55 cents per share, according to Reuters Estimates.
Constellation shares were down 29 cents, or 1.3 percent, at $22.17 on the New York Stock Exchange in morning trade.
The latest quarter's results included $3 million in acquisition-related integration costs, restructuring charges and other items, down from $45 million a year ago quarter.
Constellation said it recently closed its acquisition of Fortune Brands Inc's <FO.N> wine business, which includes the Clos du Bois, Geyser Peak and Wild Horse brands and as a result will realign the U.S. wine business into segments that will focus on luxury and fine wine, premium wine and value wine.
Constellation, which also said it would slim down its value wine portfolio, said it expects these actions to produce annual net costs savings of $20 million in fiscal 2009 and $30 million by the end of fiscal 2010.
The restructuring should also cause one-time restructuring and other charges of $37 million in 2008 and $8 million in 2009.
Constellation, based in Fairport, New York, said it now expects 2008 earnings of $1.06 to $1.11 per share, or $1.33 to $1.38 per share excluding items.
Analysts were expecting $1.38 per share for the year, excluding items, based on the company's prior forecast for net profit of $1.16 to $1.24 per share, or $1.34 to $1.42 per share excluding items.
The new outlook includes the charges and assumes a net sales decline of 29 percent to 31 percent and interest expense of $340 million to $350 million.
Third-quarter net sales fell to $1.09 billion from $1.50 billion a year ago, due to a change in how the company reports revenue from joint ventures.
Constellation said sales of branded wine rose 12 percent to $911 million, due to a 5 percent increase in North America, a 4 percent increase in Europe and flat sales in Australia and New Zealand.
Sales of spirits, which include 99 Schnapps and Black Velvet Canadian Whisky, rose 31 percent to $117 million, helped by last year's acquisition of Svedka vodka and higher pricing.
(Reporting by Martinne Geller; editing by Derek Caney and Dave Zimmerman)