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Brown-Forman’s Sales Up 5% In Its Fiscal First Half, But Strong Dollar Impacts Earnings

December 3, 2014

Brown-Forman achieved solid sales growth in its recently completed fiscal second quarter, but its net income of $208 million, or 97 cents a share, fell about 8% shy of analysts’ consensus projection of $1.05. Chairman and CEO Paul Varga said a challenging trading environment created by the strong U.S. dollar weighed down earnings, but added that he believes “underlying trends remain favorable as we head into the important holiday selling season.”

Brown-Forman’s underlying net sales were up 5% both for the second quarter and first half of the company’s fiscal 2015 (ended October 31). The Jack Daniel’s trademark’s underlying net sales rose by 7% in the first half, while Jack Daniel’s Tennessee Honey’s sales jumped by 32%. Louisville, Kentucky-based Brown-Forman’s high-end whiskey business also enjoyed significant growth, due largely to the Woodford Reserve range, which grew by 33%. The company’s Tequila business was also on the rise, as El Jimador and Herradura both posted solid gains. Elsewhere in the spirits portfolio, Finlandia and Southern Comfort endured sales declines. On the wine side, Sonoma-Cutrer and Korbel both grew sales by high-single digits.

In the U.S., Brown-Forman’s largest market, underlying net sales rose by 5% in the first half, while double-digit growth in Turkey, Brazil, Indonesia, Ukraine, and sub-Saharan Africa powered the company to 8% underlying net sales growth in emerging markets. Mexico delivered modest growth, while another key market—Poland, where Finlandia is one of the top-selling spirits brands—remained under pressure following the excise tax increase enacted earlier this year.

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