Constellation Brands (STZ 0.27%), a leading alcoholic beverage company, reported higher revenue and operating income in its fiscal 2024, which ended Feb. 29. Here's a summary of the company's annual filing.
Operating income outpaces sales growth
Constellation Brands' net sales rose by 5.4% to $9.96 billion. Additionally, operating income, which measures the profit a company makes from its core business functions, increased by 11.5% to $3.17 billion. This suggests effective management of operational costs and robust sales growth.
Net income attributable to the company came in at $1.73 billion in fiscal 2024, following a $71 million loss the previous year. That works out to $9.39 in earnings per diluted share. But the comparison isn't as meaningful because Constellation took a roughly $2 billion setback in fiscal 2023 related to impairments and losses from its investments in Canopy Growth, a Canadian cannabis company.
Beer segment leads the way
Constellation's beer segment -- the company's largest, including popular brands like Modelo -- saw net sales grow by 9.3% to $8.2 billion. This growth is driven by an increase in shipments and higher pricing. The segment's operating income also rose by 8.1% to $3.1 billion, indicating that the increase in sales volume has effectively offset rising costs.
Conversely, the wine and spirits segment faced challenges, with net sales declining by 9.5% to $1.8 billion. This decrease is attributed to a 7.1% drop in depletions, reflecting weaker consumer demand or distribution issues in this category. The segment's operating income decreased by 12% to $399 million.
An eye on premiumization
Looking ahead, Constellation Brands is focusing on leveraging consumer-led premiumization trends and enhancing its portfolio of high-end imported beer brands. The company is also committed to improving margins and operational efficiency in its Wine and Spirits segment. This strategic focus is crucial as it aligns with evolving consumer preferences and market dynamics, ensuring the company remains competitive and can capitalize on growth opportunities.
What's next for Constellation Brands?
Investors should monitor how Constellation navigates the challenges in its Wine and Spirits segment and how it mitigates broader economic and supply chain risks in the coming months.
