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Brown-Forman Reports Strong First Half Results

Stocks in this article: BFB

Underlying net sales in the United States grew 5% (2% reported, 2% constant currency), driven by the combination of strong price/mix and volume growth. Underlying net sales in developed markets outside of the United States grew by 7% (5% reported, 8% constant currency). Growth was particularly strong in the United Kingdom, France and Japan with each delivering low double-digit growth. Australia and Germany’s underlying sales were each up low single-digits.

Global price/mix contributed approximately three points to underlying net sales growth in the first half and helped drive 100bps of gross margin expansion, yielding an 8% increase in underlying gross profits (7% reported).

The company’s North American whiskey portfolio continued to grow globally, led by 10% underlying net sales growth for the Jack Daniel’s trademark. The Jack Daniel’s family of brands enjoyed strong underlying demand across price points and brand extensions. Jack Daniel’s Tennessee Honey grew underlying net sales by 30%, driven by the brand’s introduction to several new markets outside of the United States and double-digit growth in the United States. Gentleman Jack grew underlying net sales by 19% on the heels of the recently launched “Order of the Gentleman” television campaign and a significant increase in total media spend. Jack Daniel’s Single Barrel grew underlying net sales 7% and Jack Daniel’s RTDs grew 4% despite a challenging market in Australia.

Other brands within the company’s leading portfolio of North American whiskeys also performed well. Woodford Reserve grew underlying net sales by 27% globally. Old Forester grew underlying net sales by 16%, Early Times family of brands grew underlying sales 5%, and Canadian Mist’s family grew underlying sales 1%.

In vodka, Finlandia’s family of brands’ underlying net sales increased by 1%, driven by double-digit gains in Russia. Underlying sales were negatively impacted in Poland by customer buy-ins at the end of fiscal 2013 ahead of a price increase implemented at the beginning of fiscal 2014.

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