Jack Daniel's maker Brown-Forman beat fourth-quarter profit expectations, as price hikes on its premium whiskey and tequila helped offset waning demand.
Gains from price hikes across the portfolio and lower supply chain costs helped the company counter higher raw materials costs such as agave, a key ingredient for tequila, and wood barrels.
Brown-Forman reported earnings per share of 56 cents for the quarter ended 30 April, while analysts, on average, estimated it to earn 42 cents, according to LSEG data.
The el Jimador tequila maker's quarterly gross margin fell to 59% from 60.8% a year earlier, mainly due to increased advertising expenses and input costs.
However, the price hikes over the past few quarters have led to some consumers cutting back spending on its higher-margin liquor, causing an 8% decline in quarterly net sales.
Quarterly Highlights
For the fourth quarter, the company reported net sales of $964 million (€886 million) compared with analysts' estimates of $1.03 billion (€950 million).
Brown-Forman reported a 2% decline in the organic sales of its whiskey products owing to lower volumes for Jack Daniel's Tennessee Whiskey and Jack Daniel's Tennessee Honey, reflecting an estimated net decrease in distributor inventories.
The company, which saw a 7% drop in organic sales of its tequila business, forecast annual organic sales growth in the range of 2% to 4%, the midpoint of which is slightly below analysts' estimates of 3.68% growth.
'A Challenging Year'
Lawson Whiting, Brown-Forman’s president and chief executive officer stated, “In a challenging year within the spirits industry, Brown-Forman remained agile and focused on the long-term growth of our brands and our business.
“While our fiscal 2024 organic results reflect the inventory reductions across the entire spirits value chain, when you adjust for the changes in distributor inventory, we feel good about the results we delivered and are confident in the strength of our strategy, brands, and business. As we look to fiscal 2025, we believe we can build on this foundation and deliver top and bottom line organic growth as well as continued gross margin expansion.”
News by Reuters, additional reporting by ESM.
