Brown-Forman is expected to make more acquisitions in the next 12 months, but on a "moderate scale"

Brown-Forman is expected to make more acquisitions in the next 12 months, but on a "moderate scale"

Brown-Forman is likely to acquire more brands in the coming financial year, but on a "moderate scale", an analyst has predicted. 

In a note, analysts Normura said that with net debt "likely to disappear" for the US-based spirits firm this financial year, it expects the company to be "more acquisitive". "In theory, leveraging up to 2.5x net debt/EBITA could justify up to US$3bn of firepower," the note said. "However, we would expect smaller specific brand or country deals."

Earlier this week, Brown-Forman reported a healthy lift in net sales and underlying profits, but net profits slipped 10% to US$513.2m. 

Normura also predicted that Brown-Forman's top-line momentum would be "sustainable".

"For FY13 we continue to model high single digit increases in sales, boosted by the further roll-out of Tennessee Honey both internationally and into US ontrade; with better pricing and the loss of the low-margin wine agency, we estimate 90bp increase in margin," the note added.