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Brown-Forman Rides Whiskey Wave To Gains

March 6, 2014 – Louisville-based Brown-Forman reported a 12% increase in net income for the third quarter (ending January 31) on strong global sales of Jack Daniel’s and Woodford Reserve whiskies, with sales for Jack Daniel’s up 8% during the first three quarters of the fiscal year that ends April 30. The family-controlled company earned 82 cents per share, beating the Bloomberg analysts estimate of 75 cents.

The global outlook is shown in Brown-Forman’s net sales, which gained 5% to nearly $1.1 billion for the quarter. However, US sales only rose by 3%, while Brown-Forman reported double-digit gains in China, Brazil, Russia, India, and other developing markets. Jack Daniel’s Tennessee Honey flavored whiskey helped push the overall gains for the Jack Daniel’s brand with a 30% gain over the previous year, while Woodford Reserve sales were up by 27%. Old Forester Bourbon sales were up 25%, while Early Times (American whiskey and Bourbon expressions) fell 9%. Jack Daniel’s accounts for almost half of Brown-Forman’s overall sales each year.

During a conference call Wednesday with reporters and analysts following the earnings release, CEO Paul Varga projected overall earnings per share for the fiscal year of around $3 per share.

“We delivered great top- and bottom-line results in the third quarter, continuing the momentum from the first half. We believe our top-tier performance was due primarily to the global strength of the Jack Daniel’s trademark, disciplined innovation, our favorable skew to outperforming categories and price points, and our limited exposure to some of the emerging markets that have decelerated.”

Company executives projected Woodford Reserve will soon reach one million cases in annual sales. Brown-Forman is investing $35 million to expand production capacity at the Woodford Reserve Distillery in Versailles, Kentucky.

Varga downplayed recent reports that Brown-Forman could be an acquisition target following Suntory’s $16 billion deal to acquire Beam. The Brown family controls a majority of Brown-Forman’s key tier of shares, while the shares widely traded on exchanges carry less voting control. This would make an acquisition of the company difficult without the family’s consent.

Links: Brown-Forman (NYSE: BFA & BFB)