Constellation Brands Inc reported a better-than-expected quarterly profit on Wednesday as it sold off some alcohol brands and cut costs.
But profit still fell as Constellation's sales and margins have been pinched while the recession causes many consumers to seek out lower-priced drinks.
The maker of Robert Mondavi and Clos du Bois wines, Svedka vodka and Black Velvet Canadian Whisky said it earned $72.7 million, or 33 cents per share, excluding one-time items, in its fiscal first quarter that ended May 31, down from $73.6 million, or 34 cents per share, a year earlier.
On that basis, analysts on average expected it to earn 32 cents per share, according to Reuters Estimates.
Constellation said net earnings were $6.5 million, or 3 cents per share, down from $44.6 million, or 20 cents per share, a year earlier.
Sales fell 15 percent to $792 million, pressured by currency rate changes and the sale of brands such as Barton and Chi-Chi's premixed cocktails.
But Constellation's focus on certain products is paying off as brands such as Woodbridge by Robert Mondavi, Nobilo, Clos du Bois, Kim Crawford and Svedka are doing well despite the downturn, CEO Rob Sands said in a statement.
On a constant currency basis, organic sales rose 1 percent overall, with spirits sales up 13 percent, aided by strong growth for Svedka. Branded wine sales rose 1 percent on an organic basis, but fell 1 percent in North America.
The company said it still expects to earn $1.60 to $1.70 per share in fiscal 2010, which ends in February, compared with a profit of $1.60 per share in fiscal 2009.
(Reporting by Jessica Wohl; editing by John Wallace and Maureen Bavdek)