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Beam drinks to 10% earnings rise
Beam Inc’s fourth quarter earnings rose 10% as the spirits company saw margins improve despite slower than expected sales growth.
The company’s adjusted earnings topped Wall Street’s expectations, though Beam forecast current year earnings rising by a high single digit percentage while analysts questioned by Thomson Reuters expected 10% growth.
Ahead of the report, some analysts had said they expected Beam’s management to provide conservative guidance.
President and chief executive Matt Shattock said Beam expected total global spirits sales to rise about 3% over the course of 2012, boosted by solid demand in mature markets like the US and double-digit growth in some emerging markets.
He added that he expects Beam “to solidly outperform our market at the top line” in 2012.
The owner of Jim Beam whiskey and Courvoisier Cognac has looked to appeal to new customers through investing in product innovation, picking up on trends that are popular among spirit makers and brewers.
Beam’s acquisition of the Skinnygirl margarita brand last year gave it a fast-growing spirit brand that has since launched sangria and white cranberry cosmo flavours.
To further expand the company’s portfolio, in January Beam completed its US$95 million acquisition of the last independent Irish-whiskey distillery, Cooley.
The deal was significant as it represented Beam’s first foray into the Irish whiskey market – one of the fastest-growing spirits categories in the world right now and one which is seeing particular traction in the US and emerging markets including Russia and Brazil.
Beam reported a profit of US$94.1m, up from US$85.4m. Excluding items such as restructuring charges and asset impairments, earnings per share rose to 69 cents from 63 cents. Net sales rose 1.2% to US$637.5m.
Analysts had most recently forecast earnings of 67 cents on revenue of $653m.
Shattock said an inventory reduction in Mexico ahead of a distributor consolidation in that market lowered sales by about two percentage points.
Excluding foreign exchange and other impacts, underlying sales were strongest in Asia Pacific/South America, up 7%. They rose 5% in Europe, the Middle East and Africa and climbed 2% in North America.