Analysis - Moet Hennessy offers boost to Pernod Ricard's H1 prospects
Pernod is due to release its H1 results next month
Moet Hennessy's full-year results yesterday must have made satisfying reading for the company's parent LVMH.
But the sales and profits increases would also have enlivened fellow French wine and spirits maker Pernod Ricard, according to one analyst.
Nomura's Ian Shackleton suggested yesterday (30 January) that, as it has much in common with LVMH, Pernod can look forward to similarly robust figures come first-half results on 13 February. Both have premium portfolios (Diageo's H1 results yesterday's also showed strong global trends in the category), and are less exposed to China than struggling Remy Cointreau.
Shackleton is therefore backing the company's shares as a decent option for investors - a shot in the arm for Pernod after the first-quarter reported a marked fall in sales.
It is also, however, more bad news for Remy. The Remy Martin owner's overexposure to China saw it announce a profits warning in November, and may have forced the departure of its CEO and the head of its Cognac division this month.
Shackleton points out that 33% of Remy's profits come from China, compared to 15% for Pernod and just 11% for LVMH's wines & spirits. LVMH is strong in the US, the analyst said, and “seems to have done a good job in switching sales from China to other markets”.
Yesterday's results show that LVMH has managed to ride out the Cognac slowdown in China brought on by anti-gifting measures. The group even raised overall Cognac volumes by 3% thanks to US sales and “momentum in the nightlife segment” in China.
All of which suggests that Remy's current predicament is something it could have avoided.
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