Constellation Brands Inc., which sells Robert Mondavi wine, Svedka vodka and Corona beer, said Thursday its third-quarter net income more than tripled as it took fewer charges and benefited from a lower tax rate.
Its stock fell more than 3 percent in early trading.
The world’s biggest winemaker, which is undergoing a restructuring that includes the sale of most of its Australian and British wine business, also boosted its full-year profit outlook.
Revenue fell 2 percent to $966.4 million as wine sales, which account for more than 90 percent of its revenue, remained weak. But the Victor, N.Y.-based company saw stronger beer and spirits sales.
For the quarter ended Nov. 30, Constellation Brands earned $139.3 million, or 65 cents per share. That compared with earnings of $44.1 million, or 20 cents per share, in last year’s September-November period when it took $81 million in restructuring, acquisition and other charges.
Excluding $6 million in costs from a cider business sale, it earned 66 cents per share. Wall Street was looking for 61 cents a share, according to FactSet.
The company now expects full-year earnings of $1.80 to $1.85 per share, up from its previous forecast of $1.63 to $1.78 per share.
Its effective tax rate for the quarter fell to 29 percent from 35 percent in last year’s third quarter. It now anticipates a full-year rate of 31 percent.
Constellation shares fell 80 cents, or 3.7 percent, to $20.78 in morning trading. The stock is trading at the upper end of its 52-week range of $14.60 to $22.52.
Wine sales fell 3 percent to $911 million. Revenue in North America edged up 1 percent to $676 million but sales in Europe and Australia slumped 12 percent to $235 million.
Spirits sales rose 8 percent to $55 million, driven by a 34 percent gain for Svedka. Boosted by volume growth, operating earnings from Crown Imports, its beer joint venture with Mexican brewer Grupo Modelo SA, jumped 27 percent to $58 million.
Constellation Brands is offloading 80 percent of its Australian and British wine business to an Australian private equity firm. The proposed $230 million sale, expected to be completed by February, would shrink it down to No. 2 in the global winemaker rankings behind E. & J. Gallo Winery of Modesto, Calif.
Investors expect the sale of foreign assets to create a smaller but more profitable business with less risk.
“This is the right move for the company and positions us to better achieve the goals associated with our profitable organic growth strategy,” CEO Rob Sands said in a statement. “Our third-quarter results demonstrate that our strategy is working.”
In recent years, the company has shifted its focus toward higher-priced wines and spirits, selling off some of its lower-price brands after a two-decade acquisition spree. It also has consolidated divisions and cut its work force to 6,000 people from 8,200 in 2008.
The company’s wine brands include Clos du Bois, Woodbridge by Robert Mondavi, Blackstone and Ravenswood. It also sells liquors such as Black Velvet Canadian whiskey, and its beer imports include Negra Modelo from Mexico, Tsingtao from China and St. Pauli Girl from Germany.