Executive Summary

Q4 FY25 delivered modest top-line growth and robust non-GAAP profitability: net sales rose to $2.164B (+1% YoY), comparable EPS was $2.63 (+14% YoY), and Beer operating margin expanded to 36.6% (+220 bps YoY), offset by Wine & Spirits margin compression and large non-cash impairments on a GAAP basis .
Results exceeded Wall Street consensus: Q4 EPS $2.63 vs $2.27 consensus; revenue $2.164B vs $2.123B consensus; FY25 comparable EPS $13.78 vs $13.46 consensus; FY25 net sales $10.209B vs $10.181B consensus* .
Guidance pivot: FY26 Beer net sales growth cut to 0–3% (from prior medium-term +7–9%) with continued 39–40% Beer margins; enterprise FY26 comparable EPS guided to $12.60–$12.90 and free cash flow $1.5–$1.6B, incorporating newly announced U.S./Canada tariffs; medium-term FY27–FY28 outlook reset to low single-digit enterprise growth and 35–36% enterprise margin .
Strategic catalysts: announced divestiture of remaining mainstream wine brands to The Wine Group and enterprise restructuring targeting >$200M net annualized cost savings by FY28; Board authorized new $4B three-year buyback and raised dividend to $1.02, signaling confidence in cash generation and valuation .

What Went Well and What Went Wrong

What Went Well

Beer resilience and margin expansion: Beer segment net sales held flat YoY at $1.704B in Q4 (+0%), with operating margin up to 36.6% (+220 bps YoY) supported by pricing, cost savings, and lapping a prior-year indirect tax write-off .
FY25 cash generation beat: Operating cash flow reached $3.152B (+13%) and free cash flow $1.938B (+28%), exceeding earlier targets; net leverage at ~2.9x on a comparable basis .
Capital returns: $1.1B repurchases in FY25 and dividend raised to $1.02, alongside a new $4B buyback authorization through FY28 .
Quote (CEO): “Despite a softer consumer demand backdrop… we delivered another year of Enterprise net sales growth and substantial comparable operating margin improvement… double-digit comparable EPS growth” .

What Went Wrong

GAAP profitability impacted by non-cash charges: Q4 GAAP operating loss of $(150.3)M and GAAP EPS $(2.09) driven by goodwill, trademark, and assets-held-for-sale impairments tied to Wine & Spirits (~$3.3B FY total) .
Beer depletions softness: Q4 beer depletions declined ~1% YoY; Corona Extra depletions −6% and Cheladas −3%, while Pacifico +16% helped offset .
Wine & Spirits pressure: Q4 segment operating margin fell to 21.7% (−380 bps YoY) despite organic net sales +11% (boosted by contractual distributor payments); FY25 W&S operating income fell −18% .
Analyst concern: Long-term Beer net sales algorithm cut to +2–4% for FY27–FY28 raised questions about structural versus cyclical drivers; management emphasized nonstructural socioeconomic headwinds and tariff assumptions .

Financial Results

Metric	Q4 2024	Q3 2025	Q4 2025
Net Sales ($USD Billions)	$2.139	$2.464	$2.164
GAAP EPS ($)	$2.14	$3.39	$(2.09)
Comparable EPS ($)	$2.30	$3.25	$2.63
Operating Margin (Consolidated, %)	29.4%	32.2%	(6.9)%
Consensus EPS ($)*	—	—	2.27*
Consensus Revenue ($USD Billions)*	—	—	2.123*

Values with asterisk are retrieved from S&P Global.*

Segment performance

Segment Metric	Q4 2024	Q3 2025	Q4 2025
Beer Net Sales ($USD Billions)	$1.703	$2.032	$1.704
Beer Operating Margin (%)	34.4%	37.9%	36.6%
W&S Net Sales ($USD Billions)	$0.436	$0.431	$0.460
W&S Operating Margin (%)	25.5%	22.1%	21.7%

Selected KPIs

KPI	Q4 2024	Q4 2025
Beer Shipments (24/12 CE, Millions)	87.0	85.4
Beer Depletions (YoY %)	—	(1.0)%
W&S Shipments (9L CE, Millions)	5.7	5.9
W&S Organic Shipments (YoY %)	5.1 → —	+15.7%

FY25 full-year summary (selected)

Metric	FY24	FY25
Net Sales ($USD Billions)	$9.962	$10.209
GAAP EPS ($)	$9.39	$(0.45)
Comparable EPS ($)	$12.38	$13.78
Operating Cash Flow ($USD Billions)	$2.780	$3.152
Free Cash Flow ($USD Billions)	$1.511	$1.938

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Enterprise Net Sales Growth (Organic)	FY25	+2–5%	Achieved +2% reported; +3% organic	N/A (reported)
Beer Net Sales Growth	FY25	+4–7%	+5% FY25 actual	Met midpoint
Beer Operating Income Growth	FY25	+9–12%	+10% FY25 actual	In range
Comparable EPS ($)	FY25	$13.40–$13.80	$13.78 actual	Near high end
Comparable EPS ($)	FY26	—	$12.60–$12.90	New
GAAP EPS ($)	FY26	—	$12.33–$12.63	New
Beer Net Sales Growth	FY26	—	0–3%	New (lower vs prior medium-term)
W&S Organic Net Sales Growth	FY26	—	(17)–(20)%	New (reflects divestitures)
Enterprise Operating Margin (%)	FY27–FY28	~33–35% (Prior)	~35–36% (Updated)	Raised
Beer Operating Margin (%)	FY27–FY28	~39–40%	~39–40% (Unchanged)	Maintained
Interest Expense, Net ($)	FY26	—	~$385M	New
Tax Rate (%)	FY26	—	~18% reported & comparable	New
Diluted Shares (Millions)	FY26	—	~176M (incl. buybacks)	New
Operating Cash Flow ($B)	FY26	—	$2.7–$2.8	New
Free Cash Flow ($B)	FY26	—	$1.5–$1.6	New
Capex ($B)	FY26	—	~$1.2 (≈$1.0 Beer)	New
Dividend per share ($)	Q4 FY25	$1.01	$1.02	Raised
Share Repurchase Authorization	FY26–FY28	$2B prior (with ~$1.5B unused)	New $4B through FY28	Increased

Notes: FY26–FY28 outlooks include tariff impacts announced by the U.S. (Apr 2, 2025) and Canada (Mar 4, 2025) .

Earnings Call Themes & Trends

Topic	Q-2 (Q2 FY25)	Q-1 (Q3 FY25)	Current (Q4 FY25)	Trend
Tariffs & Trade	Multiyear currency hedging; 90% hedged FY25; manage inflation; 39–40% Beer margins long-term	Preparedness; capacity timing modular; cautious outlook includes potential tariff scenarios	USMCA compliant; FY26–FY28 guidance includes aluminum can tariffs (US), wine tariffs (NZ/Italy to U.S., U.S. to Canada)	Explicitly embedded in guidance; ongoing monitoring
Macro & Hispanic Consumer	Softer spend; unemployment impact; rate cuts may help; expect normalization; Corona slight softness	Subdued spend; value-seeking; sequential beer demand improvement; focus on distribution/innovation	Nonstructural headwinds; Hispanic consumers worried about essentials, immigration, jobs; social occasions down; expect stabilization over time	Narrative consistent; nonstructural, gradual recovery
Beer Margins	Expand via cost savings, pricing; target ~39% FY25	Short-term headwinds in H2 from lower absorption and higher marketing; still ~39% FY25	Maintain 39–40% in FY26–FY28; offsets from savings and pricing vs inflation/tariffs	Margin target reaffirmed
Brand Health & Portfolio	Modelo, Pacifico strong; Corona up slightly for year; increased A&P	Sequential acceleration in depletions; Pacifico +~20%; Cheladas +~4%	Pacifico +16% in Q4; Corona & Cheladas down; focus innovation (Sunbrew, NA) and distribution	Mix: Pacifico strength offsets softness elsewhere
Capacity & Capex	Modular additions; Veracruz initial phase late FY26/early FY27	Pushed some Mexico expansion capex into FY26; Veracruz timing intact	Veracruz module ~3M HL; footprint managed to demand; total ~55M HL by FY28	Phased adds; disciplined capex
W&S Strategy	Headwinds; focus higher-end brands; SVEDKA divestiture closed in Jan	Continued pressure; higher-end depletions improving; destocking stabilizing	Divest mainstream brands; >$200M savings by FY28; W&S margins 22–24% targeted FY27–FY28	Portfolio reshape; cost resets

Management Commentary

Strategy and outlook: “We are taking decisive actions designed to continue to support our industry-leading beer business, reset our cost base, and redefine our portfolio… targeting approximately $9 billion in operating cash flow from fiscal '26 to '28 and approximately $6 billion in free cash flow” (CEO) .
Tariffs embedded: “Guidance… includes the impact for all tariffs announced by the U.S. government on April 2, and by the Canadian government on March 4” (CFO) .
Capital deployment: “New authorization for $4 billion in share repurchases… reflective of the fact that we think that we're undervalued… we will be disciplined but also opportunistic” (CFO) .
Beer margin drivers: “Incremental volume growth… 1% to 2% pricing… cost savings initiatives… offset by inflation and tariffs… we can continue to deliver best-in-class margins at 39% to 40%” (CFO) .
W&S transformation: “Divest primarily mainstream wine brands… a portfolio of higher-end wine and craft spirits aligned to evolving consumer preferences… restructuring expected to deliver net annualized cost savings in excess of $200M by FY28” (Press Release) .

Q&A Highlights

Tariffs and compliance: STZ remains USMCA compliant; FY26–FY28 guidance incorporates aluminum can tariffs and cross-border wine tariffs; currency >70% hedged entering FY26 (management layered hedges as FX moved) .
Beer growth algorithm reset: Medium-term Beer net sales lowered to +2–4% given macro uncertainty; brand health metrics remain strong with gains in awareness and consideration; continued shelf space gains .
Margin sustainability: Beer margins held via modular footprint, savings, and pricing; depreciation and inflation acknowledged; target maintained at 39–40% .
Cash returns priority: Operating cash flow ~$9B and FCF ~$6B (FY26–FY28); leverage ~3x; maintain ~30% dividend payout; execute $4B buybacks; M&A remains last priority (tuck-ins only) .
Corona brand path: Despite recent decline, Corona remains highly loved with increased advertising; innovation (Sunbrew, NA) to broaden occasions and consumer reach .

Estimates Context

Q4 FY25: Actual comparable EPS $2.63 vs S&P consensus $2.27*; revenue $2.164B vs $2.123B* .
FY25: Actual comparable EPS $13.78 vs $13.46*; net sales $10.209B vs $10.181B* .
FY26: S&P consensus EPS $11.49* vs management comparable EPS $12.60–$12.90 (above consensus); revenue consensus $9.067B* alongside management’s flat-to-slight decline organic net sales outlook (reflecting divestitures and tariffs) .
Values with asterisk are retrieved from S&P Global.*

Key Takeaways for Investors

Near-term beat vs consensus driven by strong Beer margin execution despite volume softness; expect volatile depletions until Hispanic consumer headwinds ease and tariff impacts normalize .
Medium-term algorithm reset de-risks expectations: enterprise margins guided higher to 35–36% and Beer margins sustained at 39–40%, supporting FCF compounding even if top-line slows .
Strategic portfolio reshaping in W&S and >$200M enterprise cost savings by FY28 should raise W&S quality/margins (22–24% target) and reduce execution risk; watch divestiture closing and restructuring cadence .
Capital return story strengthened: ~$9B OCF and ~$6B FCF (FY26–FY28), new $4B buyback, maintained ~30% dividend payout; diluted shares guided down to ~176M FY26, supporting EPS resiliency .
Trading implications: Expect narrative focus on Beer volume trajectory (Modelo/Pacifico vs Corona/Cheladas), tariff pass-through, and elasticity; margin durability and buyback execution are likely positive stock catalysts if depletions stabilize .
Monitor Q1 FY26 seasonality and Veracruz ramp; incremental distribution and innovation (Sunbrew/NA, packs) are key levers to reaccelerate Beer volumes .

Appendix: Additional Data Points and Citations

Q4 Beer brand depletions: Modelo Especial ~−1%, Corona Extra ~−6%, Cheladas ~−3%, Pacifico ~+16% .
Q4 Beer shipments 85.4M cases (−1.8% YoY); W&S organic shipments +15.7% YoY .
FY25 Beer: shipments +3.3%, depletions +2.9%, net sales $8.540B (+5%), operating income $3.394B (+10%) .
Dividend: $1.02 per Class A share, payable May 15, 2025; Buyback authorization $4B through Feb 29, 2028 .