UPDATE 3-Brown-Forman posts stronger-than-expected profit

* Q4 EPS 53 cts a share vs 49 cts analysts expected

* Sales fall 12 pct

* Sees 2010 EPS of $2.60 to $3 a share

* Shares up 3.7 pct (Recasts; Adds company, analysts' comments, details, byline; Updates stock action)

By Ben Klayman

CHICAGO, June 10 (Reuters) - Brown-Forman Corp (BFb.N), the U.S. maker of Jack Daniel's whiskey and Southern Comfort, on Wednesday reported a stronger-than-expected quarterly profit as cost-cutting efforts flowed to the bottom line, sending its shares up 3.7 percent.

The company also said it expects modest growth in operating income in the current 2010 fiscal year despite the weak consumer environment and the possibility of further inventory reductions by distributors.

"The surprise was not at the sales line, it was really all gross margin," D.A. Davidson & Co analyst Timothy Ramey said, pointing to lower freight and promotional costs. He has a "neutral" rating on the stock.

Net profit fell 19 percent to $79.6 million, or 53 cents a share, in the fiscal fourth quarter that ended on April 30, from $98.7 million, or 65 cents a share, a year earlier.

Analysts polled by Reuters Estimates had expected a profit of 49 cents.

Brown-Forman said the inventory reductions and consumers shifting to lower-priced brands continued to hurt results after first occurring in the third quarter.

"No one truly knows how long or how difficult the global recession will be," Chief Executive Paul Varga told analysts on conference call.

UBS analyst Kaumil Gajrawala, who has a "sell" rating on the stock, said in a research note that destocking by retailers and distributors could take several quarters to work through and any profit growth in 2010 will come from tighter spending controls.

However, Goldman Sachs analyst Lindsay Drucker Mann, who has a "sell" rating on the stock, in a research note said the inventory cuts by distributors was less dramatic than she had expected. It was a 1 percent drag on fourth-quarter volumes, an improvement from the 3-percent hit in the third quarter and better than the company's forecast for a larger impact.

Sales fell 12 percent in the fourth quarter to $683.3 million as distributors worldwide took on less inventory and the stronger U.S. dollar reduced the value of overseas sales. Analysts had expected $677.9 million.

The Louisville, Kentucky-based company, which previously said it expected the U.S. spirits market to grow at slower rates than in the past, expects 2010 earnings of $2.60 to $3.00 a share. Analysts were expecting $2.86 a share.

"We are projecting modest underlying growth in operating income for fiscal 2010 despite an expectation that the consumer environment will continue to be challenging," Chief Financial Officer Don Berg said.

The company remains cautious in its outlook due to the recession's impact on consumers, the impact of foreign exchange and the possibility of more inventory reductions, he said.

The forecast includes an estimated hit of 12 cents due to foreign exchange rates.

"It's guidance you could drive a truck through," Tim Ghriskey, chief investment officer with Solaris Asset Management in New York, said of the wide range the company provided. Ghriskey does not own the stock, but follows the sector closely.

Brown-Forman's other brands include Casa Herradura tequila, Finlandia Vodka and Sonoma-Cutrer wine.

It was able to recently reduce its work force 8 percent through combined job cuts and early retirement offers. It also previously said it would eliminate merit pay increases and reduce discretionary spending, such as travel and meetings.

Those cuts should produce savings of $15 million to $20 million in 2010, the company said.

Brown-Forman shares rose $1.67 to $46.94 in New York Stock Exchange trading. (Reporting by Ben Klayman, editing by Maureen Bavdek)