US-based Constellation Brands, which owns Australia's second-largest wine business Hardy Wine Company, has swung back into profitability and reaffirmed its full-year earnings guidance following a $US100 million profit for the 2010 second quarter.
Its quarterly report shows that wine continued to be consumed in most western markets, with Australian wine sales still in the positive but Europeans turning away from the product.
The company said its improved performance for the three months to August 31 was driven by a US distributor transition and tax benefits. During the period Constellation Brands sliced debt by more than $US155 million and $US270 million in the year to date.
Group sales fell 8 per cent to $877 million, or down 3 per cent in constant currency terms.
Constellation Brands told investors and analysts in the US overnight that branded wine sales on a constant currency basis increased 2 per cent overall; 3 per cent in North America, 5 per cent in Australia and New Zealand and down 5 per cent in Europe. Total wine sales hit $752 million.
Wine segment operating income increased $16 million against the previous year's second quarter performance, primarily due to US shipment growth, savings from cost reduction efforts and the overlap of foreign currency losses from the previous second quarter.
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