Bell rings out for Beam

Leading lights at Beam Inc will ring the closing bell at the New York Stock Exchange tonight in a ceremony to mark its new independence.

It is an honour granted to many companies, but in Beam’s case, shareholders might care to ring a celebratory peal.

Beam’s first week as a standalone company has been marked by a steady upward progression in its shares, in contrast to the wild gyrations of a fevered Wall Street.

That means that the company is valued by the market at almost US$7 billion. Not only that, but free from the shackles of the Fortune Brands conglomerate, Beam has also had its credit rating upgraded by Moody’s, one of the major ratings agencies, as well as receiving positive recommendations from many analysts.

Moody’s said the rating upgrade and “positive” outlook stem from Beam’s position as the second biggest spirits company in the US and the fourth largest spirits company in the world, as well as its strong brands, ample liquidity, product and geographic diversity and strong and stable cash flows. The company is also a potential takeover target, as discussed by Finance on Friday last week.

Meanwhile, shareholders in Constellation Brands are more likely to be breathing sighs of relief as its shares hover close to a 12-month high.

Constellation’s second quarter profits soared on the back of price rises, improved wine and spirit sales in the US and fewer exceptional charges associated with pruning the business and concentrating on higher margins.

It was notable that following the Australian and UK wine disposals, turnover fell by 20% but profits were 78% ahead.

Although they only cover a three-month period, the results to the end of August beat Wall Street’s expectations and Constellation’s shares jumped by almost 10% yesterday morning. That was based not just on the figures, but Constellation felt able to guide the market to expect full-year results ahead of analysts’ predictions. Following four difficult years, that will be a relief to shareholders.

It was also noted that following both Diageo and Pernod Ricard saying last month that the North American market was strengthening, albeit tentatively, Constellation’s wine and spirit sales there were 5% ahead of last year’s June to August figures. This is further evidence of a welcome trend.

In a separate move yesterday, Constellation said it had purchased the 50.1% of Italian wine giant Ruffino that it did not own already.

It paid approximately US$70m and assumes virtually the same amount of debt from Ruffino.

Constellation first took a stake in Ruffino in 2004 and the fact that it has the confidence to consolidate that holding into full ownership at the same time as conducting a share buyback programme indicates that the board feels it has now got its structure right and that improved performance across the board is anticipated.