US: Earnings down in first quarter at Brown-Forman
US spirits and wines group, Brown-Forman, posted a profit of $36.1m, or 53 cents a share, for the first quarter to the end of July, down 8% from $39.2m, 57 cents, in the corresponding quarter last year.
The company said it had absorbed the impact of shifting to selling spirits directly to retailers in the UK, its second largest market, during the first quarter. In May, the company announced it would be selling spirits directly from the beginning of August via a joint venture with Bacardi. It said the initiative, which brought a previous distribution deal with Diageo to a close, reduced first-quarter earnings by about 13 cents, largely due to a change in the way it booked revenue.
Sales revenues were 1% higher at $479.6m. Beverage revenues were 5% up in the quarter, the company said, in spite of reduced turnover in the UK. Brown-Forman added that higher gross margins for spirits had been offset by prevailing cost and pricing pressure in the wine sector.
However, in a statement Brown-Forman said: "The underlying strength of Brown-Forman's core spirits brands was encouraging during the period, although the environment for both wines and consumer durables remains challenging." And, it went on to state that the earnings were consistent with an outlook for the full year earnings growth of 9-12%.
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