ROCHESTER, N.Y. (AP) - Constellation Brands Inc., the world’s biggest wine company, said Wednesday it is cutting its work force 5 percent and lowering its profit outlook largely because of a drop in wine sales in Britain and Australia in late 2008.
Citing the global economic slowdown, the company expects to report profit of $1.60 to $1.62 a share for fiscal 2009, which ended in February. That’s down from the company’s estimate in January that its annual profit was $1.68 to $1.72 a share.
Analysts polled by Thomson Reuters expect profit of $1.69 a share.
Also Wednesday, Constellation Brands said it had completed the $334 million sale of its value spirits business to New Orleans-based Sazerac Co. as it tries to focus on the more lucrative premium end of the wine and spirits markets.
The sale of more than 40 vodka, gin, rum, schnapps, cordial and other liquor brands includes $274 million in cash and $60 million in debt financing by Constellation Brands. The company said it plans to use $210 million of the proceeds to pay down debt in fiscal 2010.
The company’s more than 250 brands include Robert Mondavi, Clos du Bois and Ravenswood wines as well as Svedka vodka and Black Velvet Canadian Whisky. It also imports Corona and St. Pauli Girl beer.
Based in Victor, 20 miles southeast of Rochester, Constellation Brands employs about 8,000 people worldwide. It plans to cut 400 jobs.
“We experienced weaker-than-expected demand in our European and Australian businesses during the Christmas and New Year holiday,” Chief Executive Rob Sands said in a statement.
“The most significant impact was felt in the U.K., where the economy weakened during this critical selling season, retail competition intensified, and we made the decision to forgo participation in significant price discounting offered by multiple grocers.”
The company also blamed a duty increase in Britain in the fall, the second in 2008.
Sands said the company would cut costs across the board and has already started to do so in Britain. Additional details about the restructuring will be disclosed when it posts its fourth-quarter results April 8, he said.
Shares fell 51 cents, or 3.8 percent, to $12.75 in morning trading Wednesday. They have traded in a 52-week range of $10.66 to $23.48.
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