BrownForman Corporation (BF-A) Q1 2025 Earnings Report

BrownForman Corporation reported QQ1 2025 results with a revenue decline and meaningful working capital dynamics, yet maintained robust gross and operating margins. Revenue came in at $951 million, down 8.4% year over year and 1.4% quarter over quarter, while gross profit reached $565 million for a gross margin of 59.4%. Operating income was $281 million (operating margin 29.5%), and net income was $195 million (net margin 20.5%), translating to $0.41 per diluted share.

The quarter showcased the durability of BrownForman’s premium brand portfolio and pricing power, even as volume and top-line growth faced softer demand versus prior-year periods. A material working capital headwind characterized the period, with a sizable swing in operating cash flow and a free cash flow negative result (-$24 million) driven by a sharp change in working capital components (notably inventory and receivables). The balance sheet remains solid with a current ratio of 2.47 and a debt burden that remains elevated against near-term cash generation, underscoring a strategic period of investment behind premium brands and international expansion while prudently managing leverage. Investors should monitor the pace of working capital normalization, inventory levels, and the company’s ability to translate margin resilience into stronger free cash flow as supply chains and demand normalizes.