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Constellation Brands 2015 results: sales increase 24% and company to pay first dividend

Published:  10 April, 2015

Constellation Brands released it fiscal 2015 year end results showing an increase in consolidated net sales of 24% and following another strong year, the company announced it would initiate its first ever dividend payment in the company's history.

Much of the company's success has been driven by the acquisition of the Grupo Modelo's US commercial beer business.

Rob Sands, the chief executive officer and president of Constellation Brands, said: "We have completed another year of impressive results propelled by our Mexican beer business, which continues its incredible momentum and remains strongly positioned to generate ongoing sustainable growth. We outperformed the U.S. beer industry for the fifth consecutive year while achieving growth for every brand in our Mexican beer portfolio. And, our Nava brewery expansion is progressing as planned from a budget and timing of completion perspective."

It was the strong financial performance over 2015 that is enabling Constellation to pay out a dividend for the first time in its history. "The collective strength of these businesses has provided the foundation that enables us to initiate a common stock cash dividend for the first time in the history of our company."

This action reflects our confidence in the long-term sustainability of our business strategy, future growth potential and the expected strength of our cash flows," said Sands.

The wine and spirits portfolio of the company has helped to drive growth as well according to Sands. He said: "Within our wine and spirits business, we achieved strong earnings growth and margin expansion, while delivering better than expected results for our spirits portfolio."

The wine and spirits business only increased sales 1%, which was driven by the growth in spirits. Sands said: "Our spirits portfolio generated excellent growth for the year and gained share in the U.S. spirits category driven by new flavour introductions, including SVEDKA Strawberry Lemonade and Mango Pineapple, as well as Paul Masson Grande Amber Peach brandy."

The wine business within Constellation's product portfolio continues to be a challenge for the company. "Wine category did not achieve its overall market share goals set by the company," Sands said.

Profits for 2015 hit $839.3 million.

Overall investors were pleased with the results of the company as the stock hit a new 52-week high in trading yesterday of $121 per share.

The forecast for 2016 earnings for the company however were a bit of a let-down, according to senior market analyst Ken Odeluga at

Odeluga said: "The main news here is that Constellation Brands' forecast for full-year 2016 was a negative surprise. The market was hoping it would say its fiscal year 2016 earnings-per-share would be at least $4.80. Instead, the lower end of Constellation's 'comparable basis' earnings-per-share outlook is $4.70."

According to Odeluga despite the strong beer sales, he believes the company is forecasting a potential decrease as the US dollar strengthens. He said: "Despite a tailwind from Mexican brands which have been favoured by a fast-growing Hispanic population in the US, Constellation appeared to be signalling that the strengthening dollar would erode earnings in the coming year."

Despite the conservative forecast for 2016, Odeluga admits that most investors don't appear to be worried. Still the 46% surge of the stock in a year and strong net income growth of 36.5% in Q4 suggest the currency headwind is not at the forefront of the company's or investors' attention right now," he said.