Business

Brown-Forman sees 5% jump in profit

LOUISVILLE — Strong sales abroad helped the maker of Jack Daniel's compensate for lackluster U.S. performance and post a 5 percent increase in its second-quarter profit Thursday.

Louisville-based Brown-Forman, whose other brands include Southern Comfort and Finlandia, raised its full-year earnings forecast to a range of $3.18 to $3.42 a share, up from $2.98 to $3.38.

"Based on our first-half success, we have more confidence in our outlook for the remainder of the year and reflected that in our guidance," Brown-Forman CEO Paul Varga said in a statement.

Don Berg, Brown-Forman's chief financial officer, told investors during a conference call that the company expects "significant growth" in operating income for the rest of its fiscal year, which ends in April.

The company had net income of $154 million, or $1.05 a share, in the three months ending Oct. 31. That's up from $147.3 million, or 99 cents a share, a year earlier. Analysts expected $1 a share, according to Thomson Reuters.

Quarterly net sales were up 1 percent, at $905.7 million.

The company said international sales for its flagship Jack Daniel's Tennessee Whiskey brand grew 8 percent in the second quarter, while U.S. sales fell 1 percent.

"Jack Daniel's grew in a number of smaller, developing markets, notably in Mexico, Poland and Turkey, while continuing to perform well in key European markets and Australia," Berg said.

Sales of Jack Daniel's ready-to-drink products surged 26 percent for the year's first half. Such pre-mixed cocktails are typically offered in single-serving bottles and cans, and their popularity indicates many consumers are still choosing to drink at home rather than at bars and restaurants.

Sales of a similar product with el Jimador tequila rose 14 percent for the year's first six months, but sales of Southern Comfort ready-to-drink product fell.

Sales also fell overall for Southern Comfort and Finlandia vodka, Canadian Mist whiskey and Korbel Champagne.

Brown-Forman's winners included el Jimador tequila, whose sales surged 21 percent, and super-premium brands Bonterra, Chambord, Herradura, Sonoma-Cutrer and Woodford Reserve, whose sales rose 4 percent.

UBS analyst Kaumil S. Gajrawala was upbeat about prospects for the spirits industry. He told investors he expects U.S. sales to keep improving as consumers trade up in brands, beer makers lose market share and spending on promotions falls.

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