Operating income
stood at $625 million, which was an 11% improvement on last year, while gross
profit rose 6% to $1.05 billion.

The company has
affirmed its full-year cash flow target of approximately $2.45 billion and free
cash flow projection of between $1.2 billion and $1.3 billion.

Rob Sands, chief
executive of Constellation Brands, said: “Our first-quarter results are
consistent with our expectations for the business and reflect planned
investments in innovation for key brands, digital enablement, emerging
opportunities, and operational efficiencies.”

They include Constellation’s decision to invest $190 million in
Canopy Growth Corporation, a Canadian supplier of medicinal marijuana, ahead of
the country’s change of law on recreational cannabis use this month; as well as
the sale of its remaining interest in Accolade Wine.

“We expect these
investments to yield excellent returns well into the future,” Sands said. “I am
especially pleased with the successful execution and momentum of our new
product introductions, including Corona Premier and Familiar, which drove
industry-leading depletion growth of 9% for our beer business for the quarter.”

By category

In Constellation’s
beer portfolio, volume increased by 8.6% and net sales increased by 11%. The
Modelo and Corona brand families drove strong portfolio performance and market
share gains with depletion growth of approximately 9%.

The beer business
continues to target high-single digit volume growth and 9-11% net sales and
operating income growth for fiscal 2019.

The wine business
gained IRI market share in the first quarter, as marketing investments are
paying off and driving strong marketplace performance of higher-priced Focus
Brands, including Meiomi and Kim Crawford. Overall depletion performance was
muted following strong fourth-quarter fiscal 2018 results.

Net sales were
impacted by the overlap of strong shipment volume in the first quarter of 2018,
driven by replenishment of Meiomi supply, which was constrained coming out of
the fourth quarter of 2017. The wine and spirits business continues to target
net sales and operating income growth in the 2-4% range for fiscal 2019.

Constellation chief
financial officer David Klein said: “We remain committed to achieving our
guidance targets for the year, as the growth prospects for our business remain
solid. The strong operating cash flow we delivered in the first quarter enabled
flexibility for venture and growth investments, as well as continued share
repurchases and debt repayment.”

Source: FoodBev