Brown Forman Corporation (BF.A) has reported a 4.21 percent fall in profit for the quarter ended Jan. 31, 2017. The company has earned $182 million, or $0.47 a share in the quarter, compared with $190 million, or $0.47 a share for the same period last year. Revenue during the quarter went down marginally by 0.12 percent to $808 million from $809 million in the previous year period. Gross margin for the quarter contracted 227 basis points over the previous year period to 66.34 percent. Total expenses were 66.21 percent of quarterly revenues, up from 65.64 percent for the same period last year. That has resulted in a contraction of 58 basis points in operating margin to 33.79 percent.
Operating income for the quarter was $273 million, compared with $278 million in the previous year period.
Paul Varga, the company's chief executive officer said, "Against a continued challenging global backdrop for consumer staples, our third quarter underlying sales growth accelerated nicely relative to our first half. We expect our fourth quarter underlying sales to have a similar favorable comparison to the first half, though we now anticipate full year underlying results at the lower end of our original forecast." Varga continued, "We are pleased with the sequential organic sales improvement we've been witnessing and note that the drag on reported results due to 2016's portfolio reshaping has begun to abate."
For fiscal year 2017, Brown Forman Corporation projects revenue to grow in the range of 3 percent to 4 percent. The company projects operating income to grow in the range of 5 percent to 7 percent. The company forecasts diluted earnings per share to be in the range of $1.71 to $1.76.
Operating cash flow remains almost stable
Brown Forman Corporation has generated cash of $445 million from operating activities during the nine month period, down 0.67 percent or $3 million, when compared with the last year period. The company has spent $380 million cash to meet investing activities during the nine month period as against cash outgo of $90 million in the last year period.
The company has spent $111 million cash to carry out financing activities during the nine month period as against cash outgo of $400 million in the last year period.
Cash and cash equivalents stood at $197 million as on Jan. 31, 2017, down 37.85 percent or $120 million from $317 million on Jan. 31, 2016.
Working capital decreases marginally
Brown Forman Corporation has witnessed a decline in the working capital over the last year. It stood at $1,247 million as at Jan. 31, 2017, down 4.44 percent or $58 million from $1,305 million on Jan. 31, 2016. Current ratio was at 2.10 as on Jan. 31, 2017, down from 2.19 on Jan. 31, 2016.
Days sales outstanding were almost stable at 76 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 209 days for the quarter compared with 380 days for the previous year period.
Debt increases substantially
Brown Forman Corporation has witnessed an increase in total debt over the last one year. It stood at $2,226 million as on Jan. 31, 2017, up 28.08 percent or $488 million from $1,738 million on Jan. 31, 2016. Total debt was 48.39 percent of total assets as on Jan. 31, 2017, compared with 40.11 percent on Jan. 31, 2016. Debt to equity ratio was at 1.88 as on Jan. 31, 2017, up from 1.23 as on Jan. 31, 2016. Interest coverage ratio deteriorated to 18.20 for the quarter from 23.17 for the same period last year.
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