Constellation Brands Inc.'s (STZ) fiscal fourth-quarter loss narrowed, but the wine maker's results missed Wall Street's forecasts as sales dropped in Australia and Europe.

On a conference call, the company said the U.S. wine market continues to grow despite the recession. At the end of March, Constellation cut its guidance for fiscal 2009, saying that it saw weaker-than-expected demand during the New Year and Christmas holiday season in Europe and Australia. The stock was recently down 3.8% to $11.20.

Chief Executive Rob Sands said on a conference call that the company was looking to offset the pressures of the global economic slowdown by implementing a worldwide cost reduction program and by streamlining its distribution network.

The company also said that it has been able to use cash flow and proceeds from disposing of assets to lower its debt levels. Constellation Brands has used acquisitions to grow in recent years, although that appetite for deals also pushed up its debt.

In the fourth quarter, Constellation saw consumers be more cautious even in alcoholic beverage purchases, but the company said some of that may have been an overreaction and doesn't expect to see as much of an impact in fiscal 2010.

"Top line was weaker than we expected, driven by lower branded wine and beer sales, which in turn lead to lower gross margins," said JPMorgan's John Faucher in a research brief.

The winemaker expects lower profits for the fiscal year from its Crown Imports beer joint venture with Grupo Modelo (GPMCY), but Constellation said it has no intention of selling its interest in Crown. The beer business plans to be more aggressive in offering promotions in the summer months to help volumes.

Constellation also said it has found some reporting issues at its Australian subsidiary related to the accounting for inventory and cost of goods sold. The company said that was not material enough to require any restatement, but that management will report a material weakness as part of its assessment of internal controls for fiscal 2009.

The company, which produces Robert Mondavi wines and other brands, in late March gave a glimpse of cost-cutting plans, which include eliminating 5% of its global work force of 9,000 people. Wednesday, the company said it is aiming to save $25 million in the just-started fiscal year and more than $50 million by the end of the following year. Constellation expects to take a total of $112 million in charges, with the majority incurred in 2010.

For the quarter ended Feb. 28, the biggest global winemaker by volume reported a net loss of $406.8 million, or $1.88 a Class A share, compared with a prior-year net loss of $834.8 million, or $3.91 a share.

The latest period included $468 million in restructuring costs and other charges, mostly related to a decline in its U.K. and Australian businesses. Prior year included $888 million in restructuring-related and other charges. Excluding items, the company earned 21 cents a share in the latest quarter.

Net sales, which exclude excise taxes, decreased 17% to $735 million.

Analysts polled by Thomson Reuters most recently were looking for earnings of 22 cents on revenue of $791 billion.

Branded wine sales, which represent the bulk of its earnings, fell 4% amid a sharp decline in demand in Europe. Spirits sales increased 6%, driven by the growth of Svedka vodka brand.

For the just started fiscal year, the company expects per-share earnings of $1.60 to $1.70.

-By Anjali Cordeiro; Dow Jones Newswires; 201-938-2408; anjali.cordeiro@dowjones.com

-By Tess Stynes and Katherine E. Wegert, Dow Jones Newswires; 201-938-2473; tess.stynes@dowjones.com