Brown-Forman beats estimates
CHICAGO (Reuters) - Brown-Forman Corp. (BFa.N), the maker of Jack Daniel's Tennessee Whiskey, (BFb.N) on Tuesday posted quarterly profit that beat Wall Street estimates, and raised the lower end of its full-year earnings outlook.
Shares of the wine and spirit company's Class B shares rose nearly 2 percent in midday trading.
Brown-Forman also said sales growth of Jack Daniel's, its largest product, slowed in the United States amid an industry-wide moderation of distilled spirits sales.
Net income for the fiscal third quarter ended January 31 was $105.1 million, or 85 cents per share, down from $120.5 million, or 96 cents per share, a year ago, when the company got a boost from changes to its Australian distribution joint venture and the sale of a winery.
Excluding items, the owner of Finlandia Vodka, Southern Comfort and Fetzer wines earned 89 cents per share, beating the 82 cent-per-share average estimate of analysts polled by Reuters Estimates.
Brown-Forman said it expects to earn $3.20 to $3.30 per share for the full year, above analysts' average estimate of $3.10 per share. The revised outlook includes a gain from the sale of its Italian winery.
The company had earlier said it expects to earn between $3.14 and $3.30 per share for the full year.
Third quarter revenue grew 20 percent to $755 million, the company said, noting that about half that growth came from a weaker U.S. dollar.
DISTILLED SPIRITS SLOW
Worldwide sales of Jack Daniel's grew at a mid-single digit percentage rate in the latest quarter, with U.S. sales growth slightly below that.
On a conference call with analysts, Chief Executive Paul Varga and Vice Chairman Phoebe Wood blamed higher pricing, competition and an overall slowing in the distilled spirits market for the weaker results.
"The rate of growth in the United States has been moderating," Wood said. "It's an industry trend that's quite noticeable. And you can see that coming through in the Jack Daniel's numbers, as well."
The company also said sales in China had been hurt in the quarter by product counterfeiting and heightened competition.
Brown-Forman said it was being hurt by higher grain costs, which have nearly doubled over the last year.
Corn prices have soared recently as more of the crop is diverted to use in ethanol, the gasoline additive that has become more popular in the wake of higher prices for gasoline and increasing interest in cleaner-burning fuels.
Brown-Forman Class B shares were last up $1.03 at $65.78.
(Additional reporting by Chris Kaufman in New York)
