Market Overview

Brown Forman Distills a Good Quarter But Guidance For Next Year Is Soft

Brown Forman Distills a Good Quarter But Guidance For Next Year Is Soft
UPDATE: Brown-Forman Posts In-Line Q3 Earnings, Misses Sales Estimates
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Mid-Morning Market Update: Markets Open Higher; Brown-Forman Reports Weak Q4 Results
Earnings Scheduled For March 7, 2017

Brown Forman (NYSE: BFA) (NYSE: BFB) reported fiscal fourth quarter and full year results early Wednesday that beat analyst forecasts. However, the maker of el Jimador tequila and Jack Daniels whiskey issued weak guidance for the next year which could weigh on shares in Wednesday trading.

Fourth Quarter

For the fiscal fourth quarter of 2013 ended April 30, Brown Forman reported earnings per share of $0.52 vs. $0.46 expected and $0.49 a year ago. Earnings per share grew 6.12 percent as compared to the same period a year ago.

Revenue in the quarter was also strong as the company reported revenues of $866.0 million vs. $861.73 million expected. Revenues grew 8.07 percent from the same period last year when the company reported revenue of $801.3 million.

Fiscal Year

For the fiscal year 2013, Brown Forman reported earnings per share of $2.75, better than the consensus analyst forecast of $2.68 and 16 percent higher than 2012's $2.37. Revenue rose to $3.784 billion, a gain of 5 percent year-over-year, and beat analyst expectations slightly of $3.78 billion.


Brown Forman also issued guidance for its fiscal year 2014 which ends on April 30, 2014. For the fiscal year, the company expects to earn between $2.80 and $3.00 per share, slightly weak in comparison to the consensus analyst estimate of $2.98 per share.

Management Comments

Paul Varga, the company's chief executive officer, said, “We are pleased to have delivered another year of top-tier industry results, with underlying sales growth of 8% and underlying operating income growth of 13%. The company achieved solid price increases, which helped drive margin expansion. Due to continued global interest in North American whiskey and favorable trends in premiumization, we remain cautiously optimistic that Brown-Forman's strong and balanced organic growth will continue in fiscal 2014.”

In the press release, the company noted that underlying sales growth of eight percent was driven by strong brand performance from its focused portfolio. The company's outperformance was also fueled by the strength of the North American whiskey category, continued growth of Jack Daniel's Tennessee Honey, and growth from premium and above brands. Company-wide price/mix contributed approximately three points to full year sales growth and drove the company's global value share, while depletions grew at a mid single-digit rate. This balanced revenue growth helped deliver gross margin expansion of 200 basis points.

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