Brown-Forman Corp. reports net sales rose 9% in the fiscal second quarter to $989 million. Net profit after tax rose 13% to $282 million, or 59 cents a share.
U.S. net sales in the second quarter were up 10% (+6% organic), emerging markets sales rose 4% (5% organic) and developed international markets grow net sales 1% (2% organic).
The October launch of Jack Daniel’s Tennessee Apple in the U.S. bolstered sales about 5%. Sales of Jack Daniel’s Tennessee Whiskey were up1% in the period, which the company said was largely timing related.
Premium bourbon net sales were up 28%, driven by Woodford Reserve‘s 25$ underlying net sales growth and “even stronger growth from Old Forester.
Brown-Forman’s tequila portfolio net sales were up 10%, led by Herradura, which was up 21%, and el Jimador’s 8% growth.
“As expected, our results improved during the second quarter,” Lawson Whiting, president/CEO, said. “We continue to deliver solid underlying growth from both a geographic and portfolio perspective, despite the uncertain global economic and geopolitical environment.
“Today, we reaffirmed our underlying net sales outlook for the year and remain on track to deliver another year of mid-single digit growth in underlying net sales led by the Jack Daniel’s family of brands, including the launch of Jack Daniel’s Tennessee Apple in the United States, as well as sustained double-digit growth from our premium bourbon and tequila portfolios.”
Whiting further added, “We continue to build our business for the long-term. Our takeaway trends3 remain healthy in many major markets as we continue to invest in consumer momentum by absorbing most tariff-related costs. We believe this, coupled with increased investments in advertising and route-to-consumer changes in certain markets, position us well for the next generation of growth.”
First Half Results by Brand
Brown-Forman also reported results for the first half, which saw Jack Daniel’s family of brands underlying net sales increased 5% as growth was propelled by the launch of Jack Daniel’s Tennessee Apple in the United States and broad-based growth for Jack Daniel’s RTDs and Jack Daniel’s Tennessee Honey.
Jack Daniel’s Tennessee Whiskey posted a 1% gain, but on an underlying basis was down 1% owing to lower volumes in certain developed international markets and Travel Retail, which offset volume growth in emerging markets led by Russia and China.
Jack Daniel’s RTDs delivered volumetric gains producing underlying net sales growth of 6%. Jack Daniel’s Tennessee Honey grew net sales 3% with volume growth led by France, the U.S., and Poland.
Brown-Forman’s portfolio of premium bourbon brands, including Woodford Reserve and Old Forester, continued their strong double-digit net sales growth posting a 28% gain. Woodford Reserve, the leader in the super-premium bourbon category, grew underlying net sales 25%, fueled by the U.S., where volumetric growth was supported by expanding consumer demand. Old Forester sustained an even faster rate of underlying net sales growth powered by volumetric gains and favorable mix.
The company’s tequila brands sustained double-digit underlying net sales growth led by Herradura (+21%) and el Jimador (+8%). Herradura’s underlying net sales growth was driven by higher volumes and pricing in the United States and Mexico.
El Jimador’s underlying net sales growth was driven by higher volumes in the U.S., where consumer takeaway trends remain strong, higher pricing in Mexico, and volume growth and higher pricing in a number of other international markets.
Finlandia vodka’s underlying net sales declined 8% as lower volumes and prices in Poland were partially offset by volume gains in Russia.
The company also reaffirmed its full year fiscal 2020 guidance for underlying net sales growth and diluted earnings per share. As a result of the uncertainty in the current economic and geopolitical environment in certain emerging markets and the Travel Retail channel as well as higher input costs, the company modestly reduced its underlying operating income growth range by one percentage point.
- Underlying net sales growth of 5% to 7%
- Underlying operating income growth of 2% to 4%
- Diluted earnings per share of $1.75 to $1.85