American drinks company Brown-Forman has reported that net sales increased 9% to $723 million during the first quarter of the fiscal year, ending 31 July 2017.
The group, which manufactures spirits such as Jack Daniel's and Canadian Mist, reported that operating income increased 14% year-on-year to $244 million, and diluted earnings per share rose 27% to $0.46.
“Fiscal 2018 is off to a strong start, with 6% growth in underlying net sales and 12% growth in underlying operating income; both metrics representing a nice acceleration versus the company's solid fiscal 2017 underlying results," said Paul Varga, Brown-Forman chief executive.
Market Growth
The company's underlying net sales for the first quarter grew by 5% in the US, driven by continued gains for the Jack Daniel's family of brands.
Sales in the company's developed markets outside of the US were flat, however. There was a 17% increase in underlying sales in Australia, however, declines in other large developed markets were negatively impacted by timing, including Japan, the UK and Germany.
Underlying net sales in emerging markets continued to accelerate from last year’s sluggish start to the year, delivering 19% growth in the first quarter. The company’s two largest emerging markets, Mexico and Poland, saw double-digit growth.
Underlying and reported net sales in the company’s other emerging markets, such as Russia, Turkey, Brazil, China, and Ukraine, also experienced strong double-digit rates of growth, boosted by improving consumer demand in a more stable exchange rate environment.
Brand Performance
Overall, Brown-Forman's underlying net sales growth was led by the Jack Daniel's family, up 6% compared to last year.
The company's portfolio of super and ultra-premium whiskey brands, including Woodford Reserve, Jack Daniel's Single Barrel, and Gentleman Jack, delivered double-digit rates of aggregate growth. In particular, Woodford Reserve saw underlying net sales growth of 16%.
Finlandia vodka's underlying net sales grew by 6%, boosted by strong performance in Poland and Russia, while El Jimador tequila increased sales by 13%.
Outlook
Brown-Forman notes that the global economy remains volatile, particularly in the emerging markets, however, it is anticipating a growth in underlying net sales for the full fiscal year 2018.
"We continue to foresee growth potential for our brands, most notably in American Whiskey, and accordingly, we intend to invest against this opportunity with ever-improving prioritisation, competitiveness, effectiveness, and efficiency,” said Varga.
"With only one quarter behind us, we are reaffirming our outlook for 6-8% underlying operating income growth while raising our EPS range to $1.85 - $1.95 due to expected full year benefits from our tax rate and foreign exchange.”
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
