US: Nine-month profit creeps up at "cautious" Brown-Forman
Brown-Forman has posted a slight lift in net profit for the first nine months of its fiscal year, despite slowing sales in its third quarter.
The US-based wine and spirits company said today (10 March) that net profit for the nine months to the end of January rose by 4% year-on-year, coming in at US$354.8m. Sales for the period were flat at $2.51bn, with operating profit slipping by 2% to $539.6m.
For the three-month period to the end of January, net profit increased by 6% to $123.4m, while sales slid by 11% on the corresponding period a year earlier, coming in at $784.1m. Operating profit also slowed, down by 2% to $177.2m.
While sales for the Jack Daniel's 'Family of Whiskey Brands', excluding RTDs, were flat in the year so far, sales of flagship brand Jack Daniel's fell at a low single digit rate in the period.
The Jack Daniel's & Cola RTD saw sales dip in the low single digits, although Finlandia Vodka's sales continued to grow at double-digit rates. Southern Comfort's sales decreased at a high single-digit rate, as consumers continued to steer clear of the on-trade, particularly in the US.
The company registered growth of varying degrees for its Sonoma-Cutrer, Bonterra, Woodford Reserve and Tuaca drinks brands in the nine-month period, but Chambord and the Casa Herradura portfolio saw their sales fall in the low single digits.
During the third quarter, the company said that its super-premium brands experienced softer depletion trends when compared to the first half as they were increasingly impacted by the global economic downturn and resulting inventory reductions.
"While the global economic slowdown affected our sales in the third quarter, we continued to run the company in a manner we believe is appropriate for this environment," said Brown-Forman CEO Paul Varga.
"Like most companies today, we are cautious regarding the short-term outlook given the extreme difficulty and uncertainty in the global economy. At the same time, however, we believe the strength of our brands and the health of our balance sheet places Brown-Forman in a strong position both today and as conditions improve."
Looking forward, the company markedly cut its full-year earnings-per-share guidance to between $2.70 and $2.90.
Late last year, Brown-Forman had issued a forecast of between 3.00 and $3.20. The company blamed the shift on the expected impact of foreign exchange and global inventory reductions, along with its assumption that these factors will impact results further in the fourth quarter.
"The condition of the global economy today and the mood of people over the last 15 months, particularly the last six months, are obvious causes for concern," Varga said.
"While this may temper shorter-term growth rates for everyone, including Brown-Forman, we do not believe it diminishes the wonderful long-term opportunities which still exist to build our brands over time for the immense benefit of our shareholders."
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