Constellation Brands, the maker of Corona beer, reported its second quarter financial results before the bell on Thursday and saw its shares fell as much as 8%.
It was last year that Constellation made a sizable investment into Canadian marijuana producer Canopy Growth CGC and the company’s losses on the investment curbed its Q2 results.
Constellation reported that it lost $484.4 million during the quarter on an investment the company made in Canopy Growth.
Fortunately beer sale were strong for the company during the quarter. moving 7% from the prior year quarter to $1.64 billion. Its Wine and Spirits segment however fell 9% from a year ago to $611.1 million.
Constellation reported $2.34 billion in sales; which beat estimates and reported earnings of $2.72 per share that beat the Zack’s estimate by 4.21%.
CEO Bill Newlands said on the earnings call, “We delivered an excellent quarter driven by strong performance of our beer business. And while our wine and spirits portfolio continues to be impacted by transition activities related to the Gallo transaction, I am pleased with the pace of progress and the strategic transformation of this business. Now that we are at the halfway point in the year, I would like you to focus on two key points as the second half of the year unfolds. Number one, Constellation and Gallo are working in full cooperation with the FTC, while they continue to review our wine and spirits deal. We are confident in our ability to close the transaction, which we now expect will occur by fiscal year end 2020. For now, we have updated our fiscal 2020 EPS guidance to assume that we close at the end of the third quarter, but we will adjust accordingly as we get more clarity on exact timing. Meanwhile, we are fully committed to supporting our entire portfolio throughout the transition. Number two, during the second quarter, Constellation’s beer business remained the number one market share leader in the high-end of the U.S. beer market, representing 25% of high-end growth with Constellation growing share in every summer holiday. This is the 38th consecutive quarter of growth for our beer business and I remain confident in the prospects for this collection of iconic consumer-loved brands well into the future.”