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Brown-Forman posts 6 percent rise in 3Q profit

Brown-Forman posts 6 percent rise in 3Q profit

Brown-Forman Corp. on Tuesday reported better-than-expected earnings in its third quarter as the liquor company squeezed advertising and other expenses, offsetting mixed sales results for its brands.
The maker of the Jack Daniel's Tennessee Whiskey, Southern Comfort and Finlandia Vodka brands, however, lowered its full-year earnings outlook to between $2.70 and $2.90 per share, down from a December forecast of $3 to $3.20 per share, citing the affect of the stronger U.S. dollar and global inventory reductions. The company posted earnings per share of $2.84 in the prior year.
Its guidance includes a gain on the sale of two Italian wines, Bolla and Fontana Candida, announced earlier this fiscal year. At the time, the company estimated a gain of about 12 cents per share on the sale of the wines.
Brown-Forman's Class B shares fell $3.47, or 8.5 percent, to $37.59 in Tuesday morning trading.
For the three months ended Jan. 31, Brown-Forman earned $123.4 million, or 81 cents per share, up 6 percent from $116 million, or 75 cents a share, a year earlier.
Quarterly sales dropped 11 percent to $784.1 million, hurt by the stronger U.S. dollar.
The results beat analysts' average profit estimate _which typically excludes items _ of 77 cents per share on sales of $903.1 million, according to Thomson Reuters.
For the nine-month period, Brown-Forman posted earnings of $354.8 million, or $2.34 per share, up from $340.7, or $2.19 per share. Net sales were flat at $2.5 billion.
In the most recent quarter, Brown-Forman lowered its advertising expenses by 19 percent, and reduced its general and administrative expenses by 21 percent.
"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 Chief Executive Paul Varga.
Brown-Forman said net sales for its flagship Jack Daniel's brands, excluding ready-to-drink products, were flat on a reported basis but grew in the mid-single digits on a constant currency basis for the nine months.
Global case sales for the brands grew in the low-single digits for the nine months as gains in the U.S., Eastern Europe, Australia and Latin American were partly offset by declines in Germany, Spain, South Africa, Italy and Turkey. Third-quarter case sales were down in the low-single digits, mainly due to significant inventory reductions worldwide, the company said.
For the nine months, reported net sales for Jack Daniel's Tennessee Whiskey decreased in the low-single digits, while on a constant currency basis the brand's net sales grew in the low-single digits.
Southern Comfort's net sales fell in the high-single digits on a reported basis during the nine months, the company said. In the third quarter, case sales gains in Australia and Germany were more than offset by declines in the U.S. and the United Kingdom, it said.
Finlandia continued to show strong growth, with case sales passing the 3 million mark on a rolling 12-month basis during the third quarter, the company said.
For the nine months, Finlandia's net sales grew at a double-digit rate.
Meanwhile, Brown-Forman posted quarterly sales gains for its Woodford Reserve premium bourbon brand.


Updated : 2020-11-30 00:22 GMT+08:00