Brown-Forman Corp. shares fell 3 percent Wednesday after the distiller said that fourth-quarter sales fell 5 percent and that the global economy “remains volatile.”

But the Louisville-based company also said that adjusted for items including divestitures and currency exchange, sales improved 4 percent thanks to the strength of the Jack Daniel’s brand and premium whiskeys.

Fourth-quarter net income fell 72 percent, to $144 million, but a $485 million gain from the sale of the Tuaca and Southern Comfort brands a year earlier skewed the numbers. Brown-Forman said that without the impact of acquisitions and divestitures, diluted earnings per share fell 5 percent.

For the full year, net sales, at nearly $3 billion, fell 3 percent, though the company said that underlying net sales, which exclude the impact of divestitures, acquisitions and currency exchange, increased 3 percent. Full-year net income was $669 million, down 37 percent. Adjusted for currency and divestiture impact, earnings per share improved 5 percent.

Paul Varga

“Fiscal 2017 was another year of strong underlying growth and excellent progress in
positioning Brown-Forman for continued gains in the years ahead,” CEO Paul Varga said in filings with the Securities and Exchange Commission.

Net sales in the U.S., which account for 48 percent of total net sales, fell 3 percent in the last fiscal year though the company said that underlying net sales improved 4 percent.

The distiller said that Jack Daniel’s sales improved through higher volumes and pricing and that the company “continues to grow and develop the Jack Daniel’s family of brands and believes that the opportunity for additional growth and share gains remains robust.”

Tequila brands Herradura and el Jimador in the U.S. posted underlying net sales growth in the double digits.

Net sales in developed markets fell 3 percent, but underlying sales rose 3 percent. Reported net sales in the United Kingdom, the company’s largest developed foreign market, fell 12 percent, but the post-Brexit weakened British pound skewed those results. Without the currency impact and other adjustments, sales in the UK rose 5 percent, the distiller said.

Sales in emerging markets improved in the second half of the year, Brown-Forman said. In the first six months of the fiscal year, net sales declined 13 percent. In the second half, they fell just 1 percent.

“Growth was particularly strong in top markets such as Mexico and Poland,” the company said. “Turkey and Brazil both declined in the year as economic weakness weighed heavily on results, while Russia and India returned to growth and Ukraine delivered another year of double-digit gains.”

While the company’s premium whiskey brands, including Woodford Reserve, saw increasing demand, sales for Finlandia vodka fell. The distiller said that competition for premium vodka in Poland and Russia “remains very challenging.”

Brown-Forman also said that its total debt last year increased by about $650 million, primarily related to the issuance of bonds and the acquisition of scotch brands GlenDronach, BenRiach and Glenglassaugh. Total assets increased 10.5 percent, to $4.6 billion.

Despite a volatile global economy and intensifying competition in the developed world, Brown-Forman said it expects sales to grow up to 5 percent in fiscal 2018, excluding the impact of items such as divestitures and currency exchange. It also expected EPS to rise about 8 percent.

“Given the acceleration we experienced in the second half of the year, the investments we continue to make behind the business, and the expectation of improved contribution from innovation next year, we are forecasting another strong year in fiscal 2018,” Varga said.

Shares closed at $50.70, down 3.1 percent. Zachs Equity Research said Brown-Forman’s results came in lower than expected. Broader markets posted slight gains.

This story has been updated.