Pernod Ricard posts strong half-year growth in revenue and profit; strategic brands contribute heavily – 13/02/09

INTERNATIONAL. Pernod Ricard today reported a strong set of half-year results (to 31 December), with both revenue and profit sharply up on the corresponding period last year.

Consolidated sales hit €4.2 billion, up +13% year-on-year, including organic growth of +5%, despite a difficult second quarter. There was also a -4% currency effect and a +12% group structure effect, due to the acquisition of V&S from 23 July.

The 14 strategic brands (excluding Absolut), grew by +1% in volume and +6% in value. The strategic brands that reported the strongest value growth were: Martell (+21%), Jameson (+14%), The Glenlivet (+12%), Havana Club (+11%) and Mumm (+8%).

Chivas Regal (+6%) and Ballantine’s (+5%) performed well, whereas Malibu (+1%), Kahlùa (-7%) and Perrier Jouët (-8%) were adversely affected by market conditions and inventory reductions in the US.

Additional sales from the contribution of Vin & Sprit’s portfolio totalled €507 million for five months and seven days. The Absolut brand continued its rapid development with a slight decline in the US, said the group, but continued strong growth in other markets such as Spain, the UK, France, Germany, Poland, Italy, Brazil and Mexico.

There was a substantial +15% Group net profit from recurring operations to €685 million, with Group net profit up +5% at €615 million. Profit from recurring operations grew by +24% to €1.196 billion.

Regional performance

Asia/Rest of the World showed +23% growth (+18% organic), which was due to vigorous Martell and Ballantine’s sales in China and local brands in India.

Foreign exchange and group structure effects enhanced growth in the Americas, which achieved a +46% increase in sales. Sales were in slight decline in the US (-2%), in a more difficult market, adversely affected by inventory reductions by retailers, whereas Latin America had a very good first half-year and the Canadian market grew.

In Europe, organic growth was generated by Eastern Europe (Russia, Poland, Romania and others) with good progress in Germany and Sweden, along with more difficult markets in Spain, the UK and Italy. The contribution of Absolut and Vin & Sprit’s operations in Nordic countries resulted in a sharp overall increase in profit from recurring operations.

In France, growth from Ballantine’s, Mumm and Clan Campbell’s commercial performance was accelerated by control of structure costs and foreign exchange movements, especially the depreciation of the Pound Sterling.

Outlook

Pernod Ricard said: “The first half-year, featuring strong sales growth, a significant improvement in operating margin and the rapid and successful integration of Vin & Sprit, was outstanding.

“Although visibility is limited for the second half of the year, we anticipate that the wines & spirits sector will on the whole continue to show excellent resilience. Our leadership positions should, thanks to the combined strength of our distribution network and our strong brands, enable us to gain market share in many countries, as we did during the first half-year. Third quarter growth (the weakest quarter of the year) will, however, be affected by unfavourable technical effects, which could result in negative organic growth in sales.”

For the full year, the group is aiming for between +5% and +8% growth in profit from recurring operations.

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