布朗-福曼：2025年第四财季预览——处于特朗普风暴的中心

F25E17.92.52.714.614.518.50.7(1.4)27.42 Jun 202549.89/30.485,935.9415,65417,9186M(21.3)(1.8)(19.5)09/2406/255000550060006500 RatingOutperformPrice TargetBF/BReported EPSBF/B (USD)OLDSource: Bloomberg, Bernstein estimates and analysis.Brown-Forman will report Q4 F25 results on June 5thbefore 8am ET, followed by aconference call at 10am ET. Between tariff risks and the pressure on the US consumer,Brown-Forman finds itself in the eye of the ‘Trump storm’. Uncertainty dominates and manyroot causes (and potential solutions) can be traced to decisions in the Oval Office.Investment ImplicationsNo major inflection in US spirits data as worries around the health of the US consumerdominate. In NABCA, Brown-Forman’s volume have seen sequential weakening, nowdeclining -6.0% 3mth trailing to April YoY and underperforming the market. But in Nielsen,Brown-Forman has seen some sequential improvement. Volume decline is ‘just’ -2.6%3mth trailing to April YoY (and -1.1% ex. Cocktails, outperforming the market) and sales aredeclining -2.5% (outperforming on an ex. Cocktail basis). However, what has clearly changedfor the worse over the last few months is US consumer confidence. Distillers underperformbrewers in a recessionary environment, and valuations today are (to some extent) pricingin this risk.Outside the US, European Nielsen data is showing some modest sequentialimprovement. Cuervo called out easing market contraction in Mexico.Off-again, on-again reciprocal tariffs incentivize investors to sit on the sidelines. Aftera brief period of time when bourbon was excluded from goods slated for EU retaliatory tariffs,it then made it back on the list. This is made worse by the EU now warning that it may speedup retaliatory measures if President Trump follows through on his tariffs threats (incl. a 50%levy on steel and aluminum imports). We estimate that a 50% tariff on US whiskey sold inthe EU will result in a 10% hit to Brown-Forman group EBIT. This means that investors whomight be interested in Brown-Forman at today’s bottom valuation are incentivized to sit onthe sidelines. If the tariff goes ahead, they can get the stock for cheaper. If the tariff threat iseliminated, investors are happy to exchange the forgone upside for certainty.(cont. page 2)See the Disclosure Appendix of this report for required disclosures, analyst certifications and otherimportant information. Alternatively, visit our Global Research Disclosure Website.First Published: 03 Jun 2025 07:00 UTC Completion Date: 03 Jun 2025 07:00 UTC F26E17.014.413.417.027.333.2053.0060%2.7%12M(27.6)12.5(40.1) 53.00 USD(57.50OLD)F26E1.952.01FinancialsRevenues (M)Like-For-Like SalesGrowth (%)Adj. Operating Margin (%)ROIC Excluding Goodwill/Intangibles (x)Net Debt/EBITDA (x)EBIT Margin (%) F24AF25E2.151.86--1.87F24AF25EF26ECAGR4,1784,0394,165--(1.0)2.23.6--27.627.729.9--0.200.220.23--2.141.701.66--33.828.429.9--Close DateSPXFYEDiv YieldEV (USD) (M)PerformanceAbsolute (%)SPX (%)Relative (%)$55$50$45$40$35$3006/24 DETAILS(cont. from page 1)Potential and uncertainty in equal doses — in the eye of the ‘Trump storm’.On our estimates, Brown-Forman today is trading at just 14.7x NTM+1 EPS,a level it has not traded at since the Great Financial Crisis. On normalizednumbers, we continue to find Brown-Forman attractively valued with lots of potential. But uncertainty dominates and manyroot causes (and potential solutions) can be traced to decisions in the Oval Office. Net, there is no incremental buyer for Brown-Forman (or distillers more generally) — and we cannot say we blame them. We are cautiously ahead of consensus by ~MSD% for F26. Given the level of uncertainty, a cautious management team might refrain from issuing guidance. This will be thearea of focus for investors. We cut our earnings estimates by ~3.5%, reflecting the latest FX, scanner data and state of theUS consumer. We lower our target NTM+1 P/E multiple to 25x (was ~27x), reflecting greater risk of retaliatory EU tariffs andpressures on the US consumer.Related ResearchUS Alcohol: Trump nominates Casey Means to US Surgeon General… Is MAHA about to become anti-alcohol?Global Spirits: Deglobalization ... It's a Big World After All — The double-edged sword of protected geographical indication inspiritsUS Alcohol: Sober-curious Gen-Z or squeezed consumer wallet?... What is driving US alcohol weakness, and why it mattersUS Alcohol: Per capita consumption down sharply again in 2024, back to early 60s levels, with wine the biggest loserBrown-Forman Q3 F25: A sigh of relief... but potential EU tariffs still loomBrown-Forman: 12% workforce reduction & $70-$80m cost savings... Our takeaway on the newsVideo: Bernstein CEO Unplugged... with Brown-FormanAMERICAS ALCOHOLIC BEVERAGES 2 Source: Bloomberg, Bernstein analysis and estimatesBROWN FORMAN VOLUMES ARE UNDERPERFORMING THE MARKET IN NABCA, BUT OUTPERFORMING INBrown-Forman volumes are down -6.0% in NABCA, or -6.2% excluding cocktails, underperforming the market (ex. cockt