Brown-Forman posts sharp rise in 1Q profit
By BRUCE SCHREINER
Aug. 30, 2017
LOUISVILLE, Ky. (AP) — Brown-Forman Corp. said Wednesday its first-quarter net income rose sharply as the maker of Jack Daniel's Tennessee Whiskey reported strong sales growth across its broad portfolio of brands.
Buoyed by more favorable foreign exchange trends, the Louisville, Kentucky, company raised its full-year earnings-per-share projection to a range of $1.85 to $1.95. It reaffirmed its outlook for underlying operating income growth of 6 percent to 8 percent.
The growth was driven by continued gains for Jack Daniel's products, along with sales growth for the company's key bourbon, tequila and vodka brands.
"We continue to foresee growth potential for our brands, most notably in American whiskey, and accordingly, we intend to invest against this opportunity with ever-improving prioritization, competitiveness, effectiveness and efficiency," said CEO Paul Varga.
Underlying net sales grew by 5 percent in the U.S., while those sales surged by 19 percent in emerging markets, led by double-digit increases in Mexico and Poland, its two largest emerging markets, the company said. Those sales were flat in developed markets outside the U.S.
The strong dollar had been a drag on Brown-Forman's earnings in recent quarters, but the company said Wednesday it benefited from more stable foreign exchange that spurred improving consumer demand in the first quarter. Foreign markets account for slightly more than half of the company's sales.
The company also was moving beyond difficult year-over-year comparisons that had been influenced by its sale of the Southern Comfort and Tuaca brands to Sazerac.
Brown-Forman reported net income of $178 million, or 46 cents per share, in the first quarter ending July 31. That's compared with $144 million, or 36 cents per share, a year ago.
Quarterly net sales minus excise taxes rose 9 percent, to $723 million.
The company pointed to strong sales for many core brands.
Brown-Forman also benefited from strong growth among its super- and ultra-premium whiskey brands, including Woodford Reserve, Jack Daniel's Single Barrel and Gentleman Jack. Those brands fetch higher prices.
Underlying net sales for the entire Jack Daniel's lineup rose 6 percent in the quarter.
Woodford Reserve had a 16 percent gain, while another key bourbon brand, Old Forester, also posted double-digit growth. The company's tequila brands also surged ahead, with Herradura posting 18 percent growth while el Jimador was up 13 percent. Finlandia vodka had a 6 percent increase.
In another favorable development, wholesalers had more inventory on hand in the first quarter than a year ago, meaning they purchased more of Brown-Forman's products.
In morning trading, shares of the company added $1.74, or 3.4 percent, to $52.94.