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Brown-Forman Q3 Profit Tops View, Revenues Match; Narrows 2013 EPS Range

Alcoholic Beverage manufacturer Brown-Forman Corp. (BF-B, BF-A) reported Wednesday a profit for the third quarter that increased 18 percent from last year, reflecting improved margins and revenue growth.

Earnings per share for the quarter topped analysts' expectations, while quarterly revenues matched their estimates. The company also narrowed its earnings guidance range for the full-year 2013, while maintaining revenue outlook.

Brown-Forman, one of the largest American-owned spirits and wine companies and among the top 10 largest global spirits companies, sells its more than 35 brands in more than 160 countries. Its brands include whiskey's Old Forester, Jack Daniel's, and Canadian Mist as well as Finlandia Vodka, Southern Comfort Liqueur, Sonoma-Cutrer wines, Don Eduardo Tequilas, and Korbel California Champagnes.

"We continue to be pleased with our top-tier results in this well-performing industry. Our third quarter and year-to-date results reflect the excellent geographic breadth of our company, as well as improved portfolio and volume/margin balance," CEO Paul Varga said in a statement.

The Louisville, Kentucky-based company reported net income of $157.6 million or $0.73 per share for the third quarter, 18 percent higher than $133.1 million or $0.62 per share in the prior-year quarter.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.70 per share for the third quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 7 percent to $1.03 billion from $959.00 million in the same quarter last year, and matched five Wall Street analysts' consensus estimate of $1.03 billion. Underlying net sales grew 8 percent.

Among brands, Jack Daniel's trademark grew net sales 9 percent, Finlandia's family of brands increased net sales 2 percent and El Jimador family of brands advanced net sales 6 percent, while Southern Comfort's family of brands' net sales declined 4 percent.

Operating margin for the quarter expended 160 basis points to 23.1 percent from last year's 21.5 percent, as gross margin improved 230 basis points to 49.3 percent from last year.

Looking ahead to fiscal 2013, Brown-Forman narrowed its earnings guidance to a range of $2.60 to $2.68 per share from the prior forecast range of $2.58 to $2.70 per share, while continuing to anticipate high single-digit underlying sales growth. Street is currently looking for full-year 2013 earnings of $2.69 per share.

"Given the momentum we observe today for the North American whiskey category, emerging markets, and premium-priced spirits generally, we believe Brown-Forman is positioned well for continued strong growth," Varga added.

BF-B closed Tuesday's regular trading session at $68.03, up $0.51 on a volume of 0.36 million shares, and BF-A closed at $69.82, up $0.72 on a volume of 4,100 shares.

by RTT Staff Writer

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