LOUISVILLE, Ky. (AP) — Spirits company Brown-Forman Corp. said Wednesday that its first-quarter net income rose sharply, fueled by strong overseas sales, but the maker of Jack Daniel's Tennessee Whiskey cautioned it's bracing for a period of uncertainty regarding tariffs on its products in some key markets.
Sales surged in key European markets due to stockpiling of inventories as the company and its customers braced for the effects of tariffs imposed in the European Union that targeted American whiskey and other U.S. products. The duties were a response to President Donald Trump's decision to slap tariffs on European steel and aluminum. Brown-Forman said its underlying net sales increased by 38 percent in Germany and 33 percent in the United Kingdom in the three-month period.
The company estimated that stockpiling of inventory at retail and wholesale levels contributed about two to three points of its underlying net sales growth. Foreign markets account for slightly more than half of the company's sales, and the EU is a key player in its international business.
"There remains significant uncertainty around the duration of recently enacted tariffs, but we have been encouraged by the resilience of our business model as we are working to minimize short-term disruption and maintain our top-line momentum," said Lawson Whiting, the company's chief operating officer and incoming CEO.
The Louisville, Kentucky, company continued to predict underlying net sales growth of 6 percent to 7 percent in the current fiscal year.
Brown-Forman said it expects full-year earnings to be $1.65 to $1.75 per share.
"This range includes the net estimated change to operating income growth due primarily to tariffs, which we assume remain in place for the full fiscal year, as well as expectations for additional foreign exchange headwinds at current spot rates," the company said in its release.
On average, analysts surveyed by FactSet forecast annual earnings per share of $1.79.
Brown-Forman reported net sales growth across much of its spirits lineup in the first quarter.
The entire Jack Daniel's lineup had underlying net sales growth of 10 percent in the quarter. The company's Woodford Reserve bourbon brand was up 29 percent. Among its tequilas, el Jimador was up 11 percent and Herradura rose 10 percent.
Finlandia vodka's underlying net sales declined 10 percent.
Brown-Forman reported net income of $200 million, or 41 cents per share, for the quarter ended July 31. That's compared to $178 million, or 37 cents per share, a year ago. Quarterly net sales rose 6 percent to $766 million.
Brown-Forman shares have dropped 2.5 percent since the beginning of the year. The stock has climbed 25 percent in the last 12 months.