US: Fortune Brands Q1 profits plummet

Fortune Brands has reported a 93% dive in first quarter net profits, with sales at Beam Global Spirits & Wine down by more than 5%.

Net profits plunged to $7.4m for the first three months of 2009, compared to $120.5m in the same period last year, US-based Fortune said today (1 May). Net sales fell by 20% to $1.44bn.

Charges relating to the company's struggling golf and homes businesses were the main reason for the fall, it said. Both divisions reported operating losses for the quarter.

Fortune's drinks business, Beam Global Spirits & Wine, reported quarterly operating profits of $128.6m, flat against the previous year.  

Beam, which makes up around 60% of Fortune's annual income and includes Jim Beam Bourbon, Courvoisier Cognac and Sauza Tequila, saw sales fall by 5.6% to $486m for the quarter, compared to the same three months of last year. The drop marks an improvement from a 16% sales decline for the division in the fourth quarter of 2008.

Fortune chairman and CEO Bruce Carbonari said: "Profits in our spirits business benefited from stable consumer demand, higher pricing and favourable year-over-year US inventory movements, largely offset by soft results internationally, including the ongoing impact of the Australia RTD tax increase and unfavorable foreign exchange."

He said that each of Fortune's divisions performed "at or above expectations" in the quarter.

Reaffirming Fortune's full-year earnings target of $2.00-2.50, excluding charges, Carbonari said that the company has "the most challenging quarter of the year behind us".

He said that the distilled spirits market remains relatively stable in the face of the global economic downturn. He added: "Specifically in spirits, we'll benefit in the marketplace from our new international distribution alliance that began in April and our dedicated sales organisation in the US."