Brown–Forman Corporation, the U.S.-based alcohol beverage producer, reported robust results for the 2022 fiscal year. Net sales for the fiscal year grew 14% (17% organic) to $3.9 billion, with operating profit increasing by 3% to $1.2bn. The gross margin expanded 30bps to 60.8%, driven primarily by a favourable price/mix which offset higher costs. Brown-Forman however reported a 310bps decrease in operating margins to 30.6%.
Earnings per share decreased 7% to $1.74 primarily due to higher income taxes, partially offset by the increase in reported operating income. Free cash flow improved to $798 million from $755 million in the corresponding 12 months in 2020.
· Brown-Forman, a member of the prestigious S&P 500 Dividend Aristocrats index, has paid regular quarterly cash dividends for 78 consecutive years and has increased the regular dividend for 38 consecutive years. In 2022, the dividend increased to $1.74 from $0.71, which included a special dividend of $1 per share.
On a regional basis, the group’s largest market, the U.S., delivered strong net sales growth of 10%. This was largely due to robust Jack Daniel’s sales. International markets grew by 12%, whilst Emerging Markets expanded sales by 24%. The Travel Retail channel rebounded, with reported net sales growth of 65% on the back of a recovery in international travel.
Looking ahead, Brown-Forman anticipates continued growth in fiscal 2023 despite global macroeconomic and geopolitical uncertainties. At this stage management is projecting organic net sales growth in the mid-single digit range. Current earnings per share consensus for 2023 is $1.97.