FRANCE. Pernod Ricard yesterday released financial results for 2003, showing a fall in revenue of -27%. However, the figures are the first since Ricard withdrew from its non-wine and spirits activities.
The consolidated annual turnover for the group was €3.5 billion, compared with €4.8 billion for last year. The effect of foreign exchange rates also took a lump out of the company’s performance, and sales for its core wines and spirits unit rose only +0.3% in Euro values. The overall effect of currency fluctuations on the sales result was €283 million, due to the appreciation of the Euro against currencies in major markets such as the US Dollar, Pound Sterling, Thai Baht, Brazilian Real and Venezuelan Bolivar.
The French drinks group revised its financial results guidance upwards, however, saying that pretax profit before exceptional items will rise by +5%, including any currency impact.
Organic growth in sales on a like-for-like basis (at stable currency rates) rose by +8.1% for wines and spirits and +5.5% for the total group.
The company credited the growth to good performance by the majority of both global and local brands in the various regions of the world.
At yesterday’s press briefing Pernod Ricard joint managing director Richard Burrows told The Moodie Report: “Duty free was strongly up in the second part of the year and by +34% in Asia across all brands in the fourth quarter.”
The volume of Chivas and Martell increased by +7% and +8% respectively, showing renewed growth for the two brands. This revival was led in Asia, which is becoming the premier region for Chivas Regal, and in Europe.”2003 was very much the watershed year for Chivas,” said Burrows. “We said let this be the year that we can demonstrate how we can run this enlarged portfolio. Our model is to continue that [organic] growth going forward.”
Pernod saw its growth drivers continue their rapid development due to growth in American and European markets. The Chivas Life advertising campaign is now running successfully in 40 markets around the world and a similar Eur40 million advertising and promotion campaign for Chivas Regal is being lined up for this year. Volume for Jacob’s Creek rose by +14%, Havana Club was up by +11%, Jameson also climbed by +8%, while Amaro Ramazzotti rose by +9%. The Glenlivet climbed by +7%, despite being relatively undeveloped in Asia and Europe and is the sleeping beauty of the portfolio. “We have great ambitions for that brand,” said Chivas Bros newly-appointed CEO Christian Porta.
Figures in the Americas showed internal (organic) growth of +12.4%. This region, which accounts for 22% of the group’s sales, saw Seagram’s Gin rise by +1%, the successful launch of Seagram’s Vodka, and continued strong growth by Jameson (+18%), Jacob’s Creek (+26%) and The Glenlivet (+6%). A revival was seen in Venezuela, Argentina and Cuba.
But it was in Asia Pacific that Pernod put in its strongest performance, with internal growth leaping by +17.9%. The main beneficiaries were Chivas Regal, the relaunched Royal Salute, 100 Pipers and local brands. Domestic markets in Japan and South Korea remained depressed. Martell volumes increased in the region by +14% due to growth in China, Taiwan and Malaysia, which compensated for the decline of Japan and duty free. “Taken together, Chivas and Martell give us a considerable portfolio effect in Asia,” said Burrows.
In Europe, excluding France, internal growth rose by +4.7%, driven by growth in Italy, Greece, the UK, Czech Republic and Russia. Ireland and Poland, however, were affected by an unfavourable environment – caused by higher duty rates and intra-EU pricing issues respectively – and sales declined. Spain experienced growth for whiskies and liqueurs but decline for gin and stability for rum.
In the group’s home market of France, internal growth also slipped. Sales volumes for Ricard (-5%), Pastis 51 (-7%) and Clan Campbell (-5%), although improved in the second half of the year, suffered from the depression of the French market.
In a statement, Patrick Ricard, chairman and CEO, said: “I am pleased with the commercial results for 2003, and particularly with our performance on Chivas and Martell.
“We will exceed the guidance for internal growth in net operating result which we previously announced to the market. Despite unfavourable currency effects we anticipate a growth of our profit before tax and exceptionals of around +5 %.”
2003 also saw the continuation of a rapid reduction in the group’s debt, with further industry consolidation still very much on the agenda. “You will find we will take a very close look at whatever opportunities arise,” said Burrows.
Full-year profit results for Pernod Ricard are due on 18 March.
