Deerfield, Illinois, October 31, 2013 – Beam Inc. (NYSE: BEAM), a leading global premium spirits company, today reported results for the third quarter of 2013. Net sales for the third quarter were lower by 4% on a reported and comparable basis. Sales were adversely impacted an estimated 7 points by the timing of shipments in the United States, Australia and emerging markets, together with a challenging comparison in India. Diluted earnings per share from continuing operations were $0.52 versus $0.61 per share in the year-ago quarter. Results in the current-year period were impacted by a net charge of 7 cents per share related to items including early extinguishment of debt and organizational streamlining. Excluding charges/gains, diluted EPS from continuing operations was $0.59 versus $0.63 a year ago, reflecting the lower sales and the timing of raw materials-related costs, partly offset by the benefit of a lower effective tax rate. For the first nine months of 2013, net sales increased 3% and were up 1% on a comparable basis, adversely impacted by an estimated 3 points from lower year-to-date results in India and the timing of shipments in emerging markets and Australia. Diluted EPS was off 2% in the first nine months, and diluted EPS before charges/gains was 8% higher year to date. Favorable Demand Trends in Key Premium Categories “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 outperformance in Europe/Middle East/Africa (EMEA). Each of these segments has grown comparable sales 4% year to date,” said Matt Shattock, president and chief executive officer of Beam. “As expected in the quarter, distributors in the U.S. decreased inventories and the ready-to-serve cocktails category once again declined. Even so, U.S. consumer takeaway accelerated in the quarter as our leading Bourbon, Tequila and Vodka brands gained momentum,” Shattock said. “In our EMEA segment, we continued to deliver above-market performance, led by Jim Beam’s strength in Germany and across Europe. Indeed, our industry-leading Bourbon portfolio grew comparable sales at a double-digit rate in North America and in Europe. In Asia-Pacific/South America (APSA), we faced a tough sales comparison, including the final quarterly lap of our repositioning program in India. Even so, results in APSA were below expectations due principally to the timing of shipments in softer emerging markets and weak market conditions and reduced trade inventory levels in Australia. Gross margins for the quarter were better than expected due to the timing of costs. “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. We believe the fundamentals of our business remain strong – particularly our leadership of the Bourbon category, our strong position in the U.S. and global routes to market, and our success in driving growth through innovation. These strengths put us in a good position to drive sustained outperformance over the long term.” Financial Highlights for the Third Quarter and Year to Date:
Outlook for Market Outperformance with Earnings Growth Faster than Sales “We continue to expect a strong fourth quarter, based on an assumption of continued favorable demand trends in our core U.S. market, a gradual market recovery in Australia, and the benefit of timing in emerging markets, coupled with favorable comparisons in India,” said Shattock. “Excluding the impact of our repositioning in India, we’re targeting full-year comparable sales growth that outperforms our global market, with operating income growth faster than sales, and EPS growth even faster. Given our lower-than-expected results in APSA, we see full-year earnings tracking towards the low end of our target range to deliver high-single-digit growth in diluted EPS before charges/gains for 2013 – and that outlook continues to include an estimated two points of adverse impact from foreign exchange for the year. “Our confidence in Beam’s prospects going forward is underpinned by the strong fundamentals and sustained growth of our global spirits market, disciplined execution of our strategy to Create Famous Brands, Build Winning Markets, and Fuel our Growth, and the skill and passion of our highly motivated consumer-focused team.” The company’s full-year target for free cash flow is now in the range of $275-325 million. Key Brand Performance Comparable net sales growth, year-to-date 2013 (January – September): About Beam Inc. As one of the world’s leading premium spirits companies, Beam is Crafting the Spirits that Stir the World. Consumers from all corners of the globe call for the company’s brands, including Jim Beam Bourbon, Maker’s Mark Bourbon, Sauza Tequila, Pinnacle Vodka, Canadian Club Whisky, Courvoisier Cognac, Teacher’s Scotch Whisky, Skinnygirl Cocktails, Cruzan Rum, Hornitos Tequila, Knob Creek Bourbon, Laphroaig Scotch Whisky, Kilbeggan Irish Whiskey, Larios Gin, Whisky DYC and DeKuyper Cordials. Beam is focused on delivering superior performance with its unique combination of scale with agility and a strategy of Creating Famous Brands, Building Winning Markets and Fueling Our Growth. Beam and its 3,400 passionate associates worldwide generated 2012 sales of $2.5 billion (excluding excise taxes), volume of 38 million 9-liter equivalent cases and some of the industry’s fastest growing innovations. Headquartered in Deerfield, Illinois, Beam is traded on the New York Stock Exchange under the ticker symbol BEAM and is included in the S&P 500 Index and the MSCI World Index. For more information on Beam, its brands, and its commitment to social responsibility, please visit www.beamglobal.com and www.drinksmart.com. |