Brown-Forman 3Q profit falls on higher expenses
Wed Mar 10, 2010 8:10 AM EST
business, us, earns, forman, brown-forman, jack-daniel
LOUISVILLE — The maker of Jack Daniel's whiskey and Korbel champagne saw its fiscal third-quarter profit drop on higher expenses that were expected, but adjusted results surpassed analysts' estimates.
Brown-Forman Corp.'s stock climbed 61 cents to $56.50 in premarket trading.
The liquor company on Wednesday also narrowed its full-year earnings outlook — which may miss Wall Street's forecast — to account for a charge, sales trends and other items.
Brown-Forman, like many alcoholic beverage companies, has come under pressure during the recession as consumers have gone out to bars and restaurants less frequently. Individuals have also traded down to cheaper brands in an effort to save money.
For the three months ended Jan. 31, net income dropped 13 percent to $107.9 million, or 73 cents per share. That compares with a profit of $123.4 million, or 81 cents per share, a year earlier.
Excluding a charge of 7 cents per share to write down the value of its Don Eduardo tequila brand, profit was 80 cents per share. That beat the 70 cents-per-share estimate of analysts polled by Thomson Reuters. These estimates normally take out one-time items.
Brown-Forman's quarterly performance was hindered by an increase in selling, general and administrative expenses, which climbed to $131.5 million from $113.1 million. The higher expenses were expected though, the company said.
Sales rose 10 percent to $861.7 million, topping Wall Street's $817 million.
CEO Paul Varga said the liquor company was happy with the sales growth, saying its brands have remained solid during challenging economic conditions.
For the first nine months of the fiscal year, Brown-Forman reported sales gains from its ready-to-drink brands and growth for Gentleman Jack, Jack Daniel's and el Jimador. This was somewhat offset by sales declines in Southern Comfort, Finlandia vodka and some other brands.
Brown-Forman, based in Louisville, Ky., narrowed its fiscal 2010 profit outlook to a range of $2.98 to $3.08 per share. Its prior guidance was for earnings between $2.95 and $3.15 per share.
The liquor company said that its revised forecast accounts for the trademark impairment charge, as well as underlying net sales trends, foreign exchange rates, estimated costs for route-to-consumer enhancements, an expected increase in its tax rate and advertising, selling, general and administrative costs.
Brown-Forman said it is still concerned about consumers' spending habits as well as increased competition.
Analysts expect a profit of $3.08 per share for the year, which is at the high end of Brown-Forman's new outlook.
© 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. [*] Top of Page [#] Bottom of Page © 2005-2010 Newsvine, Inc. All rights reserved. Use standard website