Brown Forman's Results Boosted by Divestitures
08 June 2016 - 11:40PM
Dow Jones News
Brown-Forman Corp., the maker of Jack Daniel's Tennessee
whiskey, said divestures of two liquor brands drove fiscal
fourth-quarter results higher and helped offset weakness in
emerging markets.
The Louisville, Ky., company in January said it struck a deal to
sell Southern Comfort, its struggling sweet whiskey-flavored liquor
and Tuaca, an Italian liqueur, for $543.5 million to Sazerac Co.
The sale was part of Brown-Forman's push to focus on Jack Daniel's
and Woodford Reserve, which have grown in recent years behind a
surge in American whiskey sales.
Meanwhile, the company has been shifting advertising dollars
away from emerging markets across Asia and elsewhere, where demand
has dwindled due to economic downturns. In March, Chief Executive
Paul Varga said the company would remain committed to emerging
markets in the long term, but noted that it would step up efforts
to increase American whiskey sales in more stable economies.
On Wednesday, Mr. Varga called the company's recently-ended
fiscal year "a tale of two halves," with emerging market sales
rising by 8% in the first half of the year before paring that
decline to 1% in the second half. Mr. Varga noted "some signs of
stabilization" as fourth-quarter sales in those markets matched
third-quarter sales, but said countries in Asia and Russia
continued to log double-digit sales drops.
Continued growth in the company's Jack Daniel's portfolio helped
offset weakness in foreign sales. Revenue from Jack Daniel's brands
rose 6% during the year, resulting in an overall decline of 2.1%
for the full year.
In its latest quarter, ended April 30, Brown-Forman said total
sales slipped 1.5% from a year earlier, to $933 million. That
topped the $899 million analysts polled by Thomson Reuters had
predicted.
The company reported a profit of $522 million, or $2.60 a share,
up from $140 million, or 66 cents a share, a year earlier. The
result includes a $485 million gain on the sales of Southern
Comfort and Tuaca. Excluding that gain, earnings per share were 81
cents, the company said, a penny short of analysts' estimate.
For its newly started business year, Brown-Forman gave guidance
that brackets analysts' average estimate. The company expects to
post $3.42 to $3.62 in per-share profit, compared with the $3.58
analysts have predicted.
Shares in the company, down 2% this year through Tuesday's
close, were inactive during premarket trading.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
June 08, 2016 09:25 ET (13:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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