Brown-Forman – the owner of Jack Daniel’s and Chambord – has said that it expects the next fiscal year to be a better representation of its trading condition, after recording a decline in its net sales for the second year running.
For the year to the end of April, sales were down 4% to $3.86 billion, with net sales at $2.99 billion. Net income was 37% lower at $669 million.
Strong performance in its Jack Daniel’s portfolio and good growth in established markets – particularly Mexico, France and Japan – was more than offset by foreign exchange rates, acquisitions and divestments, and inventory changes.
The full-year results also paint a clearer picture of the effect of selling the Southern Comfort and Tuaca brand to Sazerac. Brown-Forman is more than $1 billion weaker than it was last year. Despite this, its net income was at a similar level to the fiscal years 2015 and 2014.
The US company vowed to ‘continue to pursue growth opportunities’ and said that it expects to see ‘improved contribution from innovation next year’, and ‘a strong year’ in general.
Brown-Forman chief executive Paul Varga said: “Fiscal 2017 was another year of strong underlying growth and excellent progress in positioning Brown-Forman for continued gains in the years ahead. This year’s results translate into the tenth straight year of growth in underlying net sales and operating income, with fiscal 2017’s underlying operating income growth of 7% approximating the ten-year average of 8%.
“Given the acceleration we experienced in the second half of the year, the investments we continue to make behind the business, and the expectation of improved contribution from innovation next year, we are forecasting another strong year in fiscal 2018, with mid-single digit underlying net sales growth and operating expense leverage driving 6-8% growth in underlying operating income.”
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