Brown-Forman reports 11 pct rise in 2Q earnings

LOUISVILLE, Ky. - Showing strength in a weak economy, Brown-Forman Corp. said Friday its second-quarter profit rose 11 percent on gains by its Jack Daniel's Tennessee Whiskey and Finlandia vodka brands.

The liquor company also raised its full-year earnings projection due to a predicted net gain from the planned sale of its Bolla and Fontana Candida wine brands.

Its Class B shares rose $4.22, or 9.6 percent, to close at $48.10.

For the three months ended Oct. 31, Brown-Forman said its earnings totaled $143.2 million, or 94 cents a share, up from $129.4 million, or 83 cents a share, a year ago.

The performance was a penny-per-share above the projection from analysts surveyed by Thomson Reuters.

Net sales rose 5 percent to $934.7 million from $893.4 million.

For the six-month period, the Louisville-based company posted earnings of $231.4 million, or $1.52 a share, up 3 percent from $224.6 million, or $1.44 a share, a year ago. Net sales rose 6 percent to $1.7 billion from $1.6 billion a year ago.

"These results ... reinforce our belief that premium wines and spirits are an affordable luxury in both good times and bad," company CEO Paul Varga said in a conference call with industry analysts.

He said the company shares in the widespread concern about the economy, but added: "As we look at both the short- and long-term road ahead of us, we continue to like our prospects and our industry position."

The strong second-quarter showing came after Brown-Forman's first-quarter profit fell 7 percent when problems with a key raw material in tequila production caused a $22 million pretax charge.

Don Berg, the company's chief financial officer, told industry analysts Friday that Brown-Forman was "well-primed" for the all-important holiday season.

"The success of our brands throughout this season will depend on consumer buying patterns during this very uncertain economic period," he said. "We are cautiously optimistic that consumers will continue to treat themselves this season to the simple indulgence of our brands."

The company said the second-quarter results were due to an improved performance by its flagship Jack Daniel's brand in the U.S. and some key export markets, continued strong growth of Finlandia and improved performance by its slumping Southern Comfort brand in the U.S., the United Kingdom and Germany.

Quarterly growth for its super-premium brands remained strong but slowed somewhat, it said.

Global case sales for the Jack Daniel's brand lineup, excluding ready-to-drink products, increased in the mid-single digits in the first six months, as gains in the U.S., Eastern Europe, Australia and Latin America were partially offset by declines in some Western European markets, the company said.

In the U.S., Jack Daniel's case sales rose in the high single digits in the second quarter, Berg said.

Finlandia case sales grew in the high-single digits in the quarter, led by continued double-digit growth in Eastern Europe, Berg said. The brand is approaching 3 million cases on a rolling, 12-month basis, he said.

Southern Comfort net sales declined in the low single digits in the six months. Its case sales showed modest improvement in the second quarter, especially in the U.S., where it rose in the low single digits, the company said.

Meanwhile, the company raised its full year earnings projection to a range of $3 to $3.20 per share, citing an estimated 12 cent per share net gain on the expected sale of its Bolla and Fontana Candida wine brands. That is up from an earlier projection of $2.88 to $3.08 a share adjusted for a recent stock split.

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