Beam profits plummet after inventories reduce

Beam Inc sales have slumped due to “weak conditions” in the emerging markets and reduced inventories in the US and Australia, yet the company remains optimistic for its full year results.

Beam Inc net sales dropped 4% to US$598.7 million in the third financial quarter

Reporting its results for the third financial quarter, Beam Inc, owners of Jim Beam Bourbon, Pinnacle vodka, and Courvoisier Cognac, announced a 4% drop in net sales to US$598.7 million.

Income from continuing operations was US$84.9 million, or US$0.52 per diluted share, for the third quarter this year, compared to US$98.4, or US$0.61 per diluted share, for the third quarter of 2012.

The company said that the QY3 results have been affected by the timings of shipments to the US, Australia and the emerging markets, as well as “challenging comparisons” in India.

Matt Shattlock, president and CEO of Beam, said: “While our shipments in the quarter were adversely impacted by several timing-related factors, our consumer sell-through strengthened in North America and we sustained our performance in Europe, the Middle East and Africa.

“Each of these segments has grown comparable sales 4% year to date. As expected in the quarter, distributors in the US decreased inventories and the ready-to-serve cocktail category once again declined.”

However, Shattlock added that its leading Bourbon, Tequila and Vodka brands had “gained momentum” off-trade while its top Bourbon portfolio experienced double digit growth in the US and Europe.

In particular, sales of Courvoisier Cognac and Teacher’s Irish Whiskey were knocked by a slowdown in the emerging markets, declining 7% and 22% respectively.

The profits of Skinnygirl spirits and bottled cocktails dropped 29% and Kilbeggan Irish Whiskey sales fell 24%, while Maker’s Mark jumped 17% and Basil Hayden’s increased 34%.

The company’s full-year target for free cash flow is now in the range of US$275m to US$325m.

“Despite our lower third quarter results, we continue to anticipate delivering good growth for the full year at the top line and even stronger growth at the bottom line,” added Shattlock.

“We believe the fundamentals of our business remain strong – particularly our leadership of the Bourbon category, our strong position in the US and global routes to market, and our success at driving growth through innovation.

“These strengths put us in a good position to drive sustained outperformance in the long-term.”