Constellation Brands concluded fiscal year 2025 on a positive note, surpassing earnings and revenue forecasts, but is confronting obstacles from impairments within its wine and spirits division.
Constellation Brands (NYSE: STZ), an international beverage corporation renowned for its iconic beer brands, recently disclosed its earnings report for the fourth quarter of 2025 on April 9, 2025. The company reported an adjusted diluted earnings per share (EPS) of $2.63, which significantly exceeded analysts’ predictions of $2.28. Revenue also outperformed expectations, reaching $2.16 billion, compared to the forecasted $2.13 billion.
The quarter was predominantly defined by a robust performance in the beer segment, even though the wine and spirits division encountered substantial challenges due to significant impairment charges.
The fourth quarter of 2025 saw Constellation Brands achieving revenue of $2,164 million, topping the estimated $2,127 million and showing a year-over-year increase from $2,139 million. The adjusted operating income was $659 million, marking a 6.2% increase from the previous year’s $620 million, while the adjusted net income rose by 12.6% to $474 million, up from $421 million. The adjusted EPS saw a 14% rise, reaching $2.63, compared to the prior year’s $2.30.
Constellation Brands is an international leader in the production and marketing of beer, wine, and spirits, operating in regions including the U.S., Mexico, New Zealand, and Italy. It is especially known for its premium Mexican beer brands such as Corona Extra and Modelo Especial, which are highly popular in the U.S. market.
The company’s business strategy centers on premiumization, which involves shifting its portfolio toward high-margin, high-growth brands. This approach is evident in its wine and spirits segment, where it divests lower-performing brands to focus on premium offerings. Key success factors include its market dominance in the high-end beer segment, investment in digital and omni-channel distribution, and disciplined capital management for expansion.
In the recent quarter, Constellation Brands demonstrated strength in its beer business, achieving a 5% net sales growth for the fiscal year, driven by a 3.3% increase in shipment volumes. Leading performers in this segment were Modelo Especial and Pacifico, which experienced volume growth of 5% and 20%, respectively. The operating margin for the beer segment improved by 180 basis points to 39.7%, mainly due to pricing initiatives and cost savings.
Conversely, the wine and spirits segment witnessed a 7% decline in full-year net sales, although the fourth quarter recorded an 11% organic net sales growth due to a favorable product mix and international market expansion. The company carried out strategic divestitures in this segment to emphasize premium brands. Nevertheless, impairment charges totaling $3.3 billion had a considerable impact on the segment due to goodwill and asset revaluations.
Further in the income statement, Constellation reported an operating income of $659 million and a net income of $474 million for the quarter, both showing notable year-over-year improvements. The company also announced a new $4 billion share repurchase program and projected operating cash flows between $2.7 and $2.8 billion.
In terms of dividends, no adjustments were announced, maintaining a focus on rewarding shareholders amidst strategic transformations. The quarterly dividend remained steady at $1.02 per share.
Looking ahead, Constellation Brands has an optimistic financial outlook for fiscal 2026, with projected EPS between $12.33 and $12.63, which is approximately 9% below the 2025 total at the midpoint of the guidance range. This outlook anticipates continued growth, notwithstanding the transitional phase involving multiple divestitures in its wine and spirits division. Management plans to drive growth through capital expenditure aimed at enhancing beer production capabilities in Mexico.
Investors are advised to monitor ongoing restructuring strategies and their impact on profitability closely. Observing the performance of the wine and spirits segment will be crucial, given the significant impairments. The company’s ability to achieve over $200 million in net annualized cost savings by fiscal 2028 will be a pivotal indicator of successful operational efficiency and long-term sustainability.
