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Constellation Brands specifies losses per plant in Mexico

Constellation Brands specifies the losses it will record due to the suspension of a beer production plant in Mexico.

To expand its production, Constellation Brands began the construction of a beer factory in Mexicali, Mexico.

To that end, the company said last year that it invested about 900 of the $ 1.4 billion it had scheduled to build that plant.

But due to an alleged lack of water in the region and the completion of a local survey on this matter, the government of Mexico declared that it denied the water permit to the factory, which implied canceling the works there.

Now, according to the company, annual capex for the beer business is expected to be in the range of $ 700 million to $ 900 million to support 15 million hectoliters of capacity expansion during fiscal 2023. -2025.

Given the current state of activities in Mexicali, Constellation Brands will not be able to use or reuse this site for future use.

As a result, the company said it expects an impairment in the range of $ 650 million to $ 680 million in the first quarter of fiscal 2022, which is previously included in the reported baseline EPS guidance for the fiscal year. 2022.

Constellation Brands

The company 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.

To this end, Constellation Brands 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, including the growth expected for the emerging market. ABA, or Alternative Alcoholic Beverage subspace, which includes hard seltzers.

In the fiscal year ended February 28, 2021, Constellation Brands posted sales of $ 9,355.7 million, an increase of 2.7% year-on-year.

Likewise, the company obtained net profits of 2,031.8 million dollars, compared to 21.4 million in the immediately previous year.

In fiscal 2021, Modelo Especial became the # 3-selling beer in the United States beer market.

 

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