* Third-quarter earnings/share $0.73 vs est $0.70
* Third-quarter sales rise 7 pct to $1.03 billion
* Expects full-year earnings/share $2.60-$2.68 vs
* Emerging markets drive growth, share of U.S. market rises
* CFO says strong sales trend expected to continue
By Siddharth Cavale
March 6 Worldwide demand for its Jack Daniel's
whiskey helped U.S. distiller Brown-Forman Corp to beat
Wall Street profit estimates for a third consecutive quarter,
and the company said full-year sales would rise.
Cash-strapped Americans are less likely to cut spending on
liquor than on groceries, an Ipsos poll for Reuters this month
showed. Brown-Forman also reported a surge in sales of whiskey
to Russia and other emerging markets over the last nine months.
The Louisville, Kentucky-based company said sales of its
flagship Jack Daniel's whiskeys and liqueurs rose 10 percent in
the nine months to Jan. 31. Sales of the Jack Daniel's Tennessee
Honey Liqueur brand alone nearly doubled.
"These rates of growth will continue into the fourth
quarter, keeping us on track to deliver high single-digit
underlying net sales growth," Chief Financial Officer Donald
Berg said on a post-earnings conference call.
Brown-Forman reported an 18 percent increase in its net
profit in the third quarter to Jan. 31. Sales rose 7 percent to
$1.03 billion in the period, the company said in a statement.
In the first nine months of the company's fiscal year,
underlying net sales rose 8 percent, driven by premium brands
and strong global demand for its North American whiskeys.
Combined, net sales to Turkey and Russia increased by more
than 35 percent in the nine months, the company said. It also
recorded double-digit percentage growth in sales to Brazil,
Mexico, India, Thailand and Indonesia.
Berg said the company's whiskey business, which includes the
Gentleman Jack and Old Forester brands, accounts for almost 60
percent of the cases sold by Brown-Forman around the world.
Brown-Forman said it gained share in its home market, the
United States, due to higher prices and strong demand for its
whiskeys and its Jack Daniel's Tennessee Honey Liqueur.
Two-thirds of Americans are spending less as they cope with
higher taxes and gasoline prices, the Ipsos poll found. But
while 62 percent of respondents said they would cut back on
clothing and shoes, and 46 percent would buy fewer groceries,
only 39 percent said they would seek to cut their liquor budget.
Brown-Forman, founded by George Garvin Brown in 1870, raised
prices on its alcoholic beverages last year to compensate for a
spike in the price of corn, which is used to make whiskey. But
this did not deter consumers, the company said.
The company said its gross margin in the third quarter rose
to 49.4 percent from 47.7 percent a year earlier.
However, fourth-quarter gross margins were likely to be
affected by investments in marketing and selling, general and
administrative expenses in Europe and Asia, Berg said.
To expand geographically, the company last year struck a
deal with Japanese brewer Asahi Group Holdings Ltd to
distribute its brands in Japan.
Brown-Forman, which also makes Finlandia vodka and Southern
Comfort liqueur, narrowed its full-year profit forecast to $2.60
to $2.68 per share, from $2.58 to $2.70 per share earlier.
Analysts on average were looking for earnings of $2.69 per
share for the full year, according to Thomson Reuters I/B/E/S.
Net income rose to $157.6 million, or 73 cents per share, in
the quarter ended Jan. 31 from $133.1 million, or 62 cents per
share, a year earlier.
Analysts on average expected third-quarter earnings of 70
cents per share.
Brown-Forman's shares were down marginally at $67.67 on the
New York Stock Exchange on Wednesday.