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Constellation Brands: Its Strong Fiscal 2Q18 Results

PART:
1 2 3 4 5 6 7
Part 3
Constellation Brands: Its Strong Fiscal 2Q18 Results PART 3 OF 7

Here’s What Drove Constellation Brands’ Sales in Fiscal 2Q18

Sales ahead of expectations

Constellation Brands (STZ) generated sales of $2.09 billion in fiscal 2Q18, which ended on August 31, 2017. Sales exceeded the consensus analysts’ sales estimate of $2.06 billion. The company’s sales rose 3.1% on a year-over-year basis.

Here&#8217;s What Drove Constellation Brands’ Sales in Fiscal 2Q18

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Headwinds and tailwinds

The 3.1% rise in Constellation Brands’ fiscal 2Q18 sales was lower than the 3.4% rise in fiscal 1Q18 and the 16.6% rise in fiscal 2Q17.

Growth in the company’s second-quarter sales was mainly driven by strong sales for its beer segment. Continued demand for the company’s Mexican beer portfolio drove higher beer volumes. However, the company’s fiscal 2Q18 sales were adversely impacted by a fall in net sales for its wine and spirits segment due to the Canadian divestiture. We’ll look at the performances of the company’s segments in Part 4 of this series.

Constellation Brands sold its Canadian wine business in December 2016 to focus on its higher-growth, higher-margin businesses. Excluding the impact of acquisitions and the Canadian divestiture, the company’s organic sales growth was 8.0% in fiscal 2Q18.

Performance of peers

Revenues for beer market leader Anheuser-Busch InBev (BUD) rose 31.2% to $14.2 billion in 2Q17. Its revenue growth was 5.4% in 2Q17, which was a result of the company’s revenue management initiatives and premiumization efforts.

Net sales for Molson Coors Brewing (TAP) fell 0.60% to $3.1 billion in 2Q17 due to adverse currency fluctuations.

We’ll look at Constellation Brands’ sales outlook and the performance of its segments in the next part of this series.

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