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Jack Daniel's maker's shares fall as it says tariffs cloud outlook

Brown-Forman Corp. shares fell in morning New York trading after the Jack Daniel's distiller reported a year-over-year profit decline in the fourth quarter of its fiscal 2018 and flagged concerns over the possible impact of retaliatory trade tariffs on U.S. liquor products.

Net income fell to $110 million, or 23 cents per share, in the quarter that ended April 30, from $144 million, or 30 cents per share, in the year-ago quarter.

Fiscal fourth-quarter operating income declined year on year to $145 million from $212 million. Net sales increased to $733 million from $694 million, and gross profit grew to $512 million from $480 million.

Brown-Forman shares were down 5.23% to $52.95 as of 11:31 a.m. ET.

For the full fiscal 2018, net income rose to $717 million, or $1.48 per share, from $669 million, or $1.37 per share, in fiscal 2017.

Baseline EPS in fiscal 2018 was $1.67. The Capital IQ consensus earnings estimate for the fiscal year was $1.56 on a normalized basis, with five analysts reporting.

Net sales came in at $3.25 billion, up from $2.99 billion a year earlier. Underlying net sales rose 6% in fiscal 2018 compared to the prior year, with 5% growth in both the U.S. and other developed markets. Emerging markets' underlying net sales grew 13%.

The Jack Daniel's family of brands posted underlying net sales growth of 6% in fiscal 2018, including a 4% increase for Tennessee Whiskey and 15% growth for Tennessee Fire.

Underlying net sales of the company's super-premium American whiskey brands grew 15% in fiscal 2018, with underlying net sales of the Woodford Reserve bourbon brand jumping 22%.

Brown-Forman CEO Paul Varga said he expects the company to maintain its "renewed momentum" in fiscal 2019. However, the whiskey-maker said the outlook is clouded by the trade measures enacted by other countries in response to U.S. tariffs.

"The competitive landscape in the developed world remains intense, not to mention concerns over potential retaliatory tariffs on American spirits," Brown-Forman said. "These factors make it difficult to accurately predict future results."

For fiscal 2019, Brown-Forman projected earnings of $1.75 per share to $1.85 per share, or growth of between 18% and 25% from fiscal 2018.

Fiscal 2019 underlying net sales growth is forecast at 6% to 7%.