US: Q1 "as anticipated" for Brown-Forman as profits slide on steady sales
- Q1 net profits slip by 3% to US$143m
- Net sales in three months to end of July inch up by 2% to $896m
- Operating profits dip by 2% to $217m
- Company reaffirms FY outlook: Sales expected to rise by high-single digit
Brown-Forman posted its Q1 numbers earlier today
Brown-Forman has posted a drop in first-quarter profits as the Jack Daniel's maker failed to overcome a strong Q1 last year, despite continued growing demand for its core whiskey brand.
Net profits in the three months to the end of July slipped by 3% to US$143m, the company said today (28 August). Net sales rose by 2% over the same period a year ago to $896m, while operating profits fell by 2% to $217m.
Brown-Forman CEO Paul Varga said the quarter "unfolded largely as anticipated", with the company on-track to deliver its expected full-year outlook of a high-digit increase in sales and a 9% to 11% rise in operating profits.
In Q1 results last year, sales and profits were boosted by buy-ins due to price rises implemented in the quarter. This year's Q1 also suffered from a 12% increase in advertising and promotional costs as the company invested in brands including Southern Comfort and Jack Daniel's Tennessee Honey.
The extra marketing spend helped increase Tennessee Honey's underlying sales growth by 26% in the quarter, with the Jack Daniel's portfolio posted a 7% underlying sales growth. Southern Comfort, which has been supported by a large media campaign over the past 12 months, saw global sales decline by 2% in Q1 as growth in the UK and Germany was offset by weakness in the US.
Looking ahead, the company said: “While results in the first quarter were negatively impacted by last year's buy-in, the company expects more favourable comparisons in the second quarter.”
Last week, Brown-Forman said it is to spend $100m upgrading its Jack Daniel's distillery to keep up with the global demand for whiskey. Global sales for the Jack Daniel's portfolio increased by 9% in Brown-Forman's latest full-year results, released in June.
For the company's official release, click here.
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