Constellation Brands determined that it will not be able to use or reuse certain assets in the frustrated construction of a brewery in Mexicali, Mexico.
As a result, the company posted a $ 666 million impairment for the first quarter of fiscal 2022.
Above all, the company has developed plans to invest in the next capacity increase in Mexico that will provide the long-term flexibility needed to support the expected future growth of the core portfolio of high-end Mexican beers.
As such, the company expects annual capex for the beer business to be in the range of $ 700 million to $ 900 million to support 15 million hectoliters of capacity expansion during fiscal 2023-fiscal 2025.
Given the current state of activities in Mexicali, Constellation determined that it will not be able to use or reuse certain assets at the facility.
So it posted an impairment of 666 million for the first quarter of fiscal 2022, which is previously included in the reported base earnings per share guidance for fiscal 2022.
Constellation Brands reported that it will continue to work with government officials in Mexico to seek various ways to recover capitalized costs and additional expenses incurred in establishing the brewery.
Today, the company is a leading international producer and marketer of beer, wine and spirits with operations in the United States, Mexico, New Zealand and Italy.
Its high-end imported beer brands include Corona Extra, Corona Light, Corona Premier, Modelo Especial, Modelo Negra and Pacifico, and its premium brands of premium wines and spirits, including Robert Mondavi. Brand Family, Kim Crawford, Meiomi, The Prisoner Brand Family, SVEDKA Vodka, Casa Noble Tequila and High West Whiskey.
Constellation Brands began construction of the brewery in Mexicali; But due to an alleged lack of water in the region and the conduction of a local survey on this matter, the government of Mexico denied the water permit to the factory, which implied canceling the works there.