Brown-Forman Corp. said Wednesday its first-quarter profit rose 6 percent as its flagship Jack Daniel's lineup posted double-digit revenue growth and the liquor company posted strong sales overseas.
The company reaffirmed its full-year earnings projection and said it expects to benefit from brand development and wider distribution to help fuel improved net sales growth.
Louisville-based Brown-Forman reported a double-digit increase in advertising spending in the latest quarter, much of it to back the introduction of its Jack Daniel's Tennessee Honey product — its latest entry in an industrywide trend toward infusing new flavors into liquor.
The company's brands had a mixed performance in the three-month period.
Its leading Jack Daniel's brand lineup had a 15 percent revenue gain for the quarter, on a constant currency basis. The company reported higher volumes for its Chambord vodka, Herradura, Sonoma-Cutrer and Woodford Reserve brands.
Overall Finlandia vodka revenue was flat for the period on the same constant currency basis, while several other brands had declines.
Southern Comfort continued to struggle with an 11 percent drop in revenue for the overall brand. The company also reported revenue declines for its el Jimador, Canadian Mist and Korbel Champagne brands.
The company said it got a lift from a weaker U.S. dollar in its increasingly important international markets. It reported gains in Germany, Turkey, the United Kingdom, Russia and Brazil, which more than offset declines in Poland, Spain and Australia.
"In this quarter, we continued to enjoy widespread international growth," said company CEO Paul Varga. "We also saw an important acceleration of our U.S. business, driven by the continued growth of the Jack Daniel's trademark and super-premium brands."
The recession made U.S. consumers less inclined to venture out for out-on-the-town drinking at bars and restaurants, which the industry calls "on premise" consumption.
For the three months ended July 31, the company reported net income of $118.1 million, or 81 cents per share. That's up from $111.4 million, or 76 cents per share, a year ago.
Net sales rose 13 percent to $840.3 million from $744.9 million a year ago.
Analysts expected earnings of 83 cents per share on revenue of $767.2 million.
Its Class B shares rose 5 cents to $73.53 in morning trading.
For the full year, Brown-Forman expects to earn $3.45 to $3.85 per share. Analysts on average expect $3.70 a share for the year.
The company recently introduced new packaging for Jack Daniel's Tennessee Whiskey and Finlandia, following up on packaging remakes for Southern Comfort, Herradura and Chambord. Varga said the investments in packaging and advertising will pay dividends.
"We believe that product, packaging and marketing innovation will continue to be important contributors to sustainable sales and profit growth in our industry," Varga said.
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