- Brown-Forman, one of the largest American-owned spirits and wine companies, reported mixed results in the first half of 2024. Net sales increased modestly by 2% to $2.1 billion. Operating income grew slightly by 1% to $660 million. Diluted earnings per share experienced a minor decline of 1% to $0.98.
- US sales declined 4%, driven by lower volumes, partially offset by higher prices across the portfolio, particularly Jack Daniel’s Tennessee Whiskey. Emerging markets emerged as the star performers, with revenue surging 17%, Mexico and Poland leading the charge.
- Global travel retail sales continued their recovery but at a slower pace than the previous year, registering a 3% increase. Jack Daniel’s sales stagnated due to lower volumes.
Premium bourbon brands, Woodford Reserve and Old Forester, also witnessed declines of 3% and 5%, respectively. - The group’s tequila portfolio experienced a 1% decline, with Herradura facing a more significant 9% organic drop due to lower US volumes. A bright spot emerged in the ready-to-drink (RTD) portfolio, where Tequila-based New Mix soared by 22%.
- Brown-Forman revised its full-year net sales growth guidance to a range of 3-5%, down from the previously projected 5-7%. This revision led to a significant drop in share prices during the trading session.
- Brown-Forman has a long and outstanding history of generating excellent returns on capital. This has seen it significantly outperform the S&P 500 over the last 40 years. However, the company is currently trading on a PE multiple of close to 35x which in our view is excessive, especially given the current challenging economic conditions.By Desmond Esakov
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