(Adds details on Canopy investment, background; updates shares)
Oct 3 (Reuters) - Constellation Brands Inc slid to a loss in the second quarter as the maker of Corona and Modelo beers booked millions of dollars in losses from its investment in pot company Canopy Growth Corp.
Shares of Constellation slipped 4%, as investors overlooked a raise in full-year adjusted earnings and a better-than-expected quarterly adjusted profit to focus on Canopy losses.
Constellation has invested over $4 billion in Canopy, banking on the proposed legalization of recreational weed in several countries. However, the company executives have said they were not pleased with Canopy losing money.
Canopy, which has been reporting losses as it continues to invest on new equipments, product research and marketing, had said in August it would need another three to five years to turn profitable.
Including losses of $484.4 million related to Canopy, net loss attributable to Constellation was $525.2 million in the quarter ended Aug. 31, compared with a profit of $1.15 billion a year earlier.
Constellation said it also marked down $839 million in value of its investment in Canopy during the quarter.
Excluding items, Constellation earned $2.72 per share in the quarter ended Aug. 31, above analysts’ estimates of $2.60 per share.
The brewer also cut its fiscal 2020 earnings per share on a reported basis to 55 cents to 75 cents from $4.95 to $5.25, but raised its adjusted profit forecast that excludes the costs related to Canopy investments to $9 to $9.20 from the previous range of $8.65 to $8.95.
Outside of its investment in Canopy, Constellation’s legacy business has been growing steadily as the company builds its Mexican and craft beer portfolio, which has helped it grow sales even as beer demand wanes across the globe.
Sales of beers, its biggest business, rose about 7.4% to $1.64 billion in the second quarter.
Net sales rose to $2.34 billion from $2.30 billion, in line with the average analyst estimate, according to IBES data from Refinitiv. (Reporting by Praveen Paramasivam and Soundarya J in Bengaluru; Editing by Shinjini Ganguli)