Constellation sets FY2012 profit above Street

NEW YORK (Reuters) - Wine and spirits maker Constellation Brands Inc (STZ.N) on Thursday forecast full-year profit above Wall Street's view and announced a new stock buyback program, and its shares rose 6.4 percent.

The world's largest branded winemaker, whose portfolio includes Robert Mondavi and Clos du Bois, also said growth in its North American wine business and strong sales of Svedka vodka contributed to better-than-expected results for the fiscal fourth quarter.

Constellation forecast adjusted earnings per share of $1.90 to $2 for the current fiscal year ending February 2012. On average, analysts' polled by Thomson Reuters I/B/E/S were looking for a profit of $1.89 per share.

While paying down debt remains a priority for the company, its board authorized a share buyback of up to $500 million to "optimize the capital structure of the business," Chief Financial Officer Robert Ryder said on a conference call with analysts.

The company is targeting some price increases on products like dessert and sparkling wines, but assured analysts that its pricing would not get "out of whack" with competitors.

"During the first quarter we will take selected price increases on certain specialty and value products to continue to enhance our margins," Rob Sands, Constellation's president and chief executive, said on a conference call with analysts.

Consumers remain price-sensitive and executives said they are seeing "trade up" to wines that used to be priced above $20 at retail and are now selling below that level.

Overall sales for the fourth quarter ended February 28 edged almost 1 percent higher to reach $715.3 million, led by a 14 percent increase in North America, excluding the effect of currency translations.

Sales in Europe and Australia were lower because Constellation has exited its wine and cider businesses there.

Constellation's profit got a boost from its Crown Imports joint venture with Grupo Modelo (GMODELOC.MX), which imports beers such as Corona into the United States. Its share of profits from Crown rose 18 percent on greater sales.

Excluding items, it earned $74.5 million, or 35 cents per share, for the fourth quarter, beating the 27 cents expected by analysts, according to Thomson Reuters I/B/E/S.

That was up from its profit of $60.2 million, or 27 cents per share, in the year-ago quarter.

Gross margin rose to 35.6 percent from 32 percent a year earlier.

Shares were up $1.29 in afternoon trading at $21.68 on the New York Stock Exchange.

(Reporting by Phil Wahba in New York and Lisa Baertlein in Los Angeles, editing by Gerald E. McCormick, Dave Zimmerman)