By Martinne Geller
Feb 1 Beam Inc reported a
smaller-than-expected decline in fourth-quarter earnings and
gave an optimistic 2013 forecast as it benefits from strong
demand for bourbon and growth in emerging markets.
On a net basis, the maker of Jim Beam, Maker's Mark and Knob
Creek bourbons said on Friday that earnings were $126.3 million,
or 79 cents per share, in the fourth quarter. It earned $88.5
million, or 56 cents, a year earlier.
Excluding one-time items, earnings fell 3 percent to 67
cents per share, due to a 20 percent increase in advertising
spending during the key holiday season.
On that basis, analysts, on average, were expecting 66 cents
per share, according to Thomson Reuters I/B/E/S.
Beam, which ended its first full year as a standalone drinks
company, cited a bigger-than-expected lift from last year's
purchase of Pinnacle vodka and higher-than-expected sales of
bourbon, which has been gaining popularity in recent years.
Overall net sales rose 11 percent to $709.1 million.
Excluding the impact of foreign exchange rates, acquisitions
and divestitures, sales rose 5 percent, fueled by gains of 8
percent in North America and 4 percent in the Europe, Middle
East and Africa segment.
Sales in the Asia Pacific/South America segment fell 2
percent, hurt by lower results in India where the company is
"repositioning its business" after a report of possible
violations of the U.S. Foreign Corrupt Practices Act.
Beam said in November it was investigating allegations of
financial lapses at its Indian operations and that corrective
actions had been taken. It said at the time its moves could
affect business in the country, which represented about 3
percent of sales and a smaller percentage of profit.
The company did not elaborate on those actions.
M&A HELPS OUTLOOK
For the new year, Beam said it is aiming for
earnings-per-share growth in the high single digits in
percentage terms, before one-time items, versus the $2.40 per
share it earned in 2012.
The overall spirits market should grow about 3 percent this
year, in line with last year, the company said, adding that it
will face higher raw material costs and very little help from
Still, Beam expects to benefit from strong demand for
bourbon, new products and marketing, strong growth in emerging
markets and recent acquisitions.
Beam itself has been seen as a takeover candidate ever since
late 2011, when it was separated from the home products business
now known as Fortune Brands Home & Security Inc.
But the deal in April to buy Pinnacle for $605 million made
it a much bigger bite for potential buyers, which could include
Britain's Diageo Plc, France's Pernod Ricard SA
and privately held Bacardi.
Market speculation has centered around Diageo buying Beam,
since Beam's bourbons would fill a glaring hole in the global
leader's portfolio. The rumors heated up in December, when
Diageo said it ended talks on buying a stake in Jose Cuervo, the
top-selling tequila, making Beam's Sauza tequila also
Diageo said on Thursday it planned to focus on developing
its own tequila brand in-house.
Taking into account the 17 percent rise in Beam shares over
the past year through Thursday, its market capitalization was
$10 billion. Its shares did not trade premarket on Friday.