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Brown-Forman reiterates growth targets as Q1 profits increase

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  • First-quarter net profits rise by 4% to US$156m
  • Reported net sales in three months to end of July dip by 2% to $900m, up by 7% in underlying terms
  • Operating profits increase by 3% to $227m and by 9% on underlying basis
  • Confirms fiscal-2016 outlook of 6% to 7% underlying sales growth, 8% to 10% underlying operating profits growth, and EPS in the range of $3.40 to $3.60

Brown-Forman has reported a "strong start" to its latest fiscal year, with high single-digit profit growth forecast for the period.

Brown-Forman CEO Paul Varga hailed an impressive start to the new fiscal year

Brown-Forman CEO Paul Varga hailed an impressive start to the new fiscal year

The company said earlier today that net and operating profits in the three months to the end of July were both up in reported terms by 4% and 3% respectively. The top-line increased on an underlying basis by 7%, with reported sales having to battle with foreign exchange headwinds.

The Q1 performance was in line with outlook issued in June, when the firm forecast full-year underlying sales growth of 6% to 7% and increasing underlying operating profits in the region of 8% to 10%. Brown-Forman reiterated the estimates in today's results release.

While the firm noted rises in underlying sales in most markets, Global Travel Retail operations saw sales drop by 18% due to volume declines in the channel in the Americas and Europe. "These declines appear to have been driven by the combination of the timing of orders from customers as well as significantly lower spend in the channel by Russian travellers," Brown-Forman said.

For a look at Brown-Forman's first-quarter performance by region and by brand, click here

CEO Paul Varga added: "Despite a volatile global economy, adverse foreign exchange, and increasing competitive intensity, our growth in underlying sales and operating income were impressive, and continued to compare quite favourably to our industry competitive set. These results were again driven by the Jack Daniel's trademark and our leading portfolio of American whiskey brands."

The company flagged "strong global demand for authentic American whiskey brands, consumer interest in flavoured whiskey, and a trend towards premium spirits" as reasons for its growth prospects looking forward. However, Brown-Forman warned, "significant uncertainty remains around the global economic environment and its potential impact on our business, making it difficult to predict future results".

Coverage of the company's post-results conference call can be found here

To read the company's official results statement, click here.


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