US: Fortune reports strong Q1 despite challenges

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Fortune Brands, the US consumer brands company helping Pernod Ricard buy Allied Domecq, said it had experienced a strong first quarter, as consumer demand remained strong across a number of categories.

However, the company said the performance of its wines and spirits division was only "moderate".

 "We are delighted Fortune Brands delivered such strong performance that grew significantly above our extraordinary results in the year-ago quarter," said Fortune Brands chairman and CEO Norm Wesley. "Despite challenging comparisons, we delivered double-digit growth in EPS and 5% sales growth - both achieving our long-term growth goals.

"Consumer demand remains strong across categories," Wesley continued. "Starbucks(TM) Coffee Liqueur is off to an excellent start. Overall results in Spirits & Wine were moderated by challenging comparisons to our 16% spirits and wine sales growth in the year-ago quarter driven by previously disclosed distributor buy-in ahead of price increases. Even so, spirits and wine sales excluding foreign exchange and excise taxes grew 4%, reflecting a favourable mix shift to premium and super-premium products. In the second quarter, we expect reported spirits and wine sales to bounce back, and we also expect to benefit from the timing of new product launches in golf, as well."

The company said first quarter net income was US$152.7m, or $1.02 per diluted share, up 11% from US$0.92 in the year-ago quarter. Excluding a net gain of US$0.01 in the year- ago quarter, diluted EPS before charges/gains grew 12%.
Net sales increased 5% to US$1.79bn. The net impact of acquisitions, excise taxes and foreign exchange was minimal, a statement said.

 "As we look to the second quarter, we feel well positioned to continue driving strong earnings growth that achieves our long-term goals. We'll continue to benefit from our brand-building investments, new product innovations and industry-leading supply chains. For the second quarter, we're targeting diluted EPS before charges/gains to grow at a double-digit rate. For the full year, we're continuing to target double-digit growth in EPS before charges/gains, as well.

"Let me also note that our free cash flow target remains in the US$450-500m range, and that's after dividends and capital expenditures and before the impact of the two previously announced transactions we expect to complete this year."

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