By Micah Maidenberg
Constellation Brands Inc. said the value of its bet on a Canadian cannabis company fell again in the latest quarter.
The owner of the Corona and Modelo beer brands on Wednesday reported a $534 million decline in the value of its investment in Canopy Growth Corp. tied to weaker share prices for that company. In all, Constellation said its exposure to Canopy sliced a quarter off profit for the company's fiscal third quarter.
Constellation, which in 2018 invested about $4 billion in Canopy, wagering on the future of cannabis-infused drinks and other products, reported a loss in its previous quarter tied to Canopy. Shares of the Canadian firm have lost almost 35% of their value over the past year.
However, the beverage company said its profit and sales gained on stronger demand for its beer. Shares of Constellation rose 4% in premarket trading.
The company reported earnings of $360.4 million for its fiscal third quarter, compared with $303.1 million a year earlier. Its adjusted profit of $2.14 a share surpassed the consensus estimate of $1.82 a share as compiled by FactSet.
Sales rose about 1% to $1.99 billion, a bit more than forecasts.
Beer sales rose 8% to $1.31 billion in the quarter compared with the previous year. Wine and spirits dropped 10% to $689 million, the company said.
Constellation has been rethinking its portfolio amid shifting consumer interest in alcoholic drinks.
The company struck a deal last month to sell its Ballast Point craft-beer brand to a Chicago-area brewer. It plans to launch an alcoholic seltzer to compete with offerings such as Mike's Hard Lemonade Co.'s White Claw.
Constellation also is working to sell a portfolio of wines to E. & J. Gallo Winery. The companies said in December they revised the deal by excluding some brands from the transaction to address concerns the Federal Trade Commission raised during a review.
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