Constellation Brands Inc (NYSE:STZ) saw its shares drop on Thursday after the Corona and Modelo beers firm posted second quarter results dented by a big write-down from its investment in cannabis company Canopy Growth (CSE:WEED).
The NYSE-listed group took a $839 million write-down in the value of its investment in Canopy Growth during the quarter having invested more than $4 billion in the loss-making company as it banks on the benefits of planned legalization of recreational weed in several countries.
The write-down took the froth of the brewer’s move to raise its adjusted fiscal 2019 earnings forecast, excluding the Canopy costs, to a $9.00 to $9.20 per share range, up from the previous range of $8.65 to $8.95 per share.
However, Constellation chopped its fiscal 2020 earnings per share estimate on a reported basis to a $0.55 to $0.75 range, down from the $4.95 to $5.25 range forecast previously.
In its second quarter ended August 31, 2019, excluding one-time items, Constellation earned $2.72 per share, above analysts’ estimates for $2.60 per share.
The firm’s net sales in the quarter rose to $2.34 billion from $2.30 billion, in line with the consensus estimate, while sales of beers - its biggest business - increased by around 7.4% to $1.64 billion.
In afternoon trade in New York, Constellation’s shares were 5.2% lower at $195.90.
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