Brown-Forman - BFA - Strong First Half Results and Raises Full Year Outlook

Brown-Forman Corporation (NYSE:BFA) reported financial results for its second quarter and the first half of fiscal 2013 ended October 31, 2012. Reported net sales were flat¹ in the quarter at $1,013 million, and increased 6% on an underlying basis. As expected, reported net sales growth in the quarter was negatively impacted from the giveback associated with first quarter trade buy-ins in advance of price increases, as well as the impact from foreign exchange and the absence of Hopland-based wines. Reported operating income in the quarter increased 7% to $262 million, up 9% on an underlying basis. Diluted earnings per share for the second quarter increased 11% to $0.80 compared to $0.73 in the prior year period. For the first six months of the year, underlying sales increased 8%, underlying operating income increased 12% (+2% and +12%, respectively on a reported basis), and diluted earnings per share increased 18% to $1.49.



Paul Varga, the company’s chief executive officer said, “Our brands continue to deliver strong and balanced underlying growth in an uncertain global environment. We are pleased with the balance in both geographic and portfolio mix, as well as the fact that our gross margin expansion has benefited from volume gains, higher prices and lower costs.”



Year-to-Date 2013 Highlights

• Underlying net sales increased 8%, driven by broad-based geographic gains and brand performance, with constant currency net sales³up 9%:
  
  
  
  
  
  • Jack Daniel’s family of brands grew net sales 9%
  
  
  
  • The company’s super and ultra-premium whiskey brands grew net sales 21%
  
  
  
  • Herradura grew net sales 22%
  
  
  
  • Finlandia’s family of brands grew net sales 9%
  
  
  
  
  
  



• Underlying operating income increased 12%, driven by revenue growth, gross margin expansion, and operating expense leverage.