Brown Forman Corporation (BF.A) has reported a 72.41 percent plunge in profit for the quarter ended Apr. 30, 2017. The company has earned $144 million, or $0.37 a share in the quarter, compared with $522 million, or $1.30 a share for the same period last year. On an adjusted basis, earnings per share were at $0.38 for the quarter compared with $0.40 in the same period last year. Revenue during the quarter dropped 4.80 percent to $694 million from $729 million in the previous year period. Gross margin for the quarter contracted 121 basis points over the previous year period to 69.16 percent. Total expenses were 69.45 percent of quarterly revenues, up from 0.41 percent for the same period last year. That has resulted in a contraction of 6904 basis points in operating margin to 30.55 percent.
Operating income for the quarter was $212 million, compared with $726 million in the previous year period.
Paul Varga, the company's chief executive officer said, "Fiscal 2017 was another year of strong underlying growth and excellent progress in positioning Brown-Forman for continued gains in the years ahead. This year's results translate into the tenth straight year of growth in underlying net sales and operating income, with fiscal 2017's underlying operating income growth of 7% approximating the 10-year average of 8%." Varga added, "Given the acceleration we experienced in the second half of the year, the investments we continue to make behind the business, and the expectation of improved contribution from innovation next year, we are forecasting another strong year in fiscal 2018, with mid-single digit underlying net sales growth and operating expense leverage driving 6-8% growth in underlying operating income."
For fiscal year 2018, Brown Forman Corporation expects revenue to grow in the range of 4 percent to 5 percent. The company expects operating income to grow in the range of 6 percent to 8 percent. The company projects diluted earnings per share to be in the range of $1.80 to $1.90.
Operating cash flow improves
Brown Forman Corporation has generated cash of $639 million from operating activities during the year, up 21.95 percent or $115 million, when compared with the last year. The company has spent $422 million cash to meet investing activities during the year as against cash inflow of $433 million in the last year.
The company has spent $285 million cash to carry out financing activities during the year as against cash outgo of $1,060 million in the last year period.
Cash and cash equivalents stood at $182 million as on Apr. 30, 2017, down 30.80 percent or $81 million from $263 million on Apr. 30, 2016.
Working capital decreases marginally
Brown Forman Corp has witnessed a decline in the working capital over the last year. It stood at $1,381 million as at Apr. 30, 2017, down 4.23 percent or $61 million from $1,442 million on Apr. 30, 2016. Current ratio was at 2.42 as on Apr. 30, 2017, down from 2.82 on Apr. 30, 2016.
Debt increases substantially
Brown Forman Corporation has witnessed an increase in total debt over the last one year. It stood at $2,149 million as on Apr. 30, 2017, up 43.17 percent or $648 million from $1,501 million on Apr. 30, 2016. Total debt was 46.46 percent of total assets as on Apr. 30, 2017, compared with 35.88 percent on Apr. 30, 2016. Debt to equity ratio was at 1.57 as on Apr. 30, 2017, up from 0.96 as on Apr. 30, 2016. Interest coverage ratio deteriorated to 14.13 for the quarter from 66 for the same period last year.
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