Constellation Brands Again Lowers Value of Cannabis Bet
January 08 2020 - 9:06AM
Dow Jones News
By Micah Maidenberg
Constellation Brands Inc. said the value of its bet on a
Canadian cannabis company fell again in the latest quarter.
The owner of the Corona and Modelo beer brands on Wednesday said
the value of its investment in Canopy Growth Corp. dropped by $534
million, slicing a quarter off profit for the company's fiscal
third quarter.
Constellation, which in 2018 invested about $4 billion in
Canopy, wagering on the future of cannabis-infused drinks and other
products, reported a loss in its previous quarter tied to its
exposure to the company. Canopy shares have lost almost 35% of
their value over the past year.
However, the beverage company said its profit and sales moved
higher on stronger demand for its beer. Shares of Constellation
rose 4% in premarket trading.
The company reported earnings of $360.4 million for its fiscal
third quarter, compared with $303.1 million a year earlier. Its
adjusted profit of $2.14 a share surpassed the consensus estimate
of $1.82 a share as compiled by FactSet.
Sales rose about 1% to $1.99 billion, a bit more than
forecasts.
Beer sales rose 8% to $1.31 billion in the quarter compared with
the previous year. Wine and spirits dropped 10% to $689 million,
the company said.
Constellation has been rethinking its portfolio amid shifting
consumer interest in alcoholic drinks.
The company struck a deal last month to sell its Ballast Point
craft-beer brand to a Chicago-area brewer. It plans to launch an
alcoholic seltzer to compete with offerings such as Mike's Hard
Lemonade Co.'s White Claw.
Constellation also is working to sell a portfolio of wines to E.
& J. Gallo Winery. The companies said in December they revised
the deal by excluding some brands from the transaction to address
concerns the Federal Trade Commission raised during a review.
(END) Dow Jones Newswires
January 08, 2020 08:51 ET (13:51 GMT)
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