Brown-Forman posts 8 percent rise in 4Q net income

The company behind such brands as Finlandia, Southern Comfort and el Jimador on Wednesday reported strong yearlong sales in the U.S. and a surging performance in developed and emerging markets abroad. Global net sales for its Jack Daniel’s Tennessee Honey nearly doubled in the just-ended fiscal year as the honey-infused product was introduced in several key overseas markets, the company said.

Looking ahead, the company predicted sales growth in the high single-digit range in the coming year, led by global expansion of Jack Daniel’s Tennessee Whiskey and Jack Daniel’s Tennessee Honey. And shopper should prepare for another round of price increases, though more modest and selective.

“We plan on implementing additional price increases at a low single-digit rate in a market-by-market basis,” the company’s chief financial officer, Don Berg, said during a conference call with industry analysts.

The Louisville-based company raised prices on many of its premium brands during the past year, which contributed to the higher earnings. Those increases were the first in several years as the company tried to hold on to demand amid tough economic conditions in the U.S. and elsewhere.

Brown-Forman CEO Paul Varga said Wednesday he remained “generally encouraged by the pricing environment for premium distilled spirits.” He indicated the company would be more selective in raising prices.

“We certainly feel stronger about the possibilities for pricing in our whiskeys relative to say vodkas,” Varga said.

Other sales drivers in the coming year will be continued growth in Finlandia vodka, expected improvement in Southern Comfort’s performance and a focus on such super-premium brands as Herradura tequila, Woodford Reserve bourbon, Gentleman Jack and Jack Daniel’s Single Barrel, the company said.

The company set its full-year earnings outlook in the range of $2.80 to $3 per share. Analysts had expected $2.99 per share.

Brown-Forman reported net income of $113 million, or 52 cents per share, for the three months ended April 30. That’s up from $105 million, or 49 cents per share, a year ago. Quarterly net sales rose 8 percent to $866 million.

Analysts surveyed by FactSet expected earnings of 46 cents per share on net sales of $801.7 million.

For the full year, the company reported net income of $591 million, or $2.75 per share. That’s up from $513 million, or $2.37 per share, the year before. Full-year net sales rose 5 percent to $3.78 billion. Analysts had expected full-year earnings of $2.69 per share on net sales of $2.84 billion.

Brown-Forman said its net sales grew by 8 percent in the U.S. in the past year, a turnaround from the prior year when domestic sales were flat.

Australia and the United Kingdom — the company’s two largest overseas markets — had net sales growth in the mid-single digits in the past year, while sales in France grew by 14 percent. Among emerging markets, net sales jumped by 38 percent in Turkey, 36 percent in Russia and 23 percent in Brazil, the company said.

Meanwhile, the full Jack Daniel’s lineup was the sales pacesetter for the full year, with 11 percent net sales growth when excluding currency swings, it said.

Net sales for the company’s el Jimador tequila lineup rose 7 percent on the same constant-currency basis for the year, while the Finlandia vodka brand had a 6 percent gain.

Sales for the Southern Comfort brand were down 4 percent, an improvement from the prior year when sales sank 7 percent. The struggling brand grew its U.S. sales by 1 percent in the past year, its first uptick since 2008, Berg said. He called it a first step toward returning the brand to profitable global growth.

Sales for Korbel Champagne rose 6 percent, while Canadian Mist sales slipped 1 percent. Sales for its super-premium brands including Chambord, Herradura, Sonoma-Cutrer and Woodford Reserve rose 10 percent for the year. Those super-premium brands carry heftier prices.