just On Call - Pernod Ricard in bullish mood despite European struggles
Pernod Ricard is struggling in southern Europe
In a bullish conference call with journalists, Pernod CEO Pierre Pringuet called the numbers “absolutely excellent” and defied the assembled media to say otherwise. “Let me remind you of the key points here,” Pringuet said in Paris.
“Pernod Ricard has exceeded its objectives and it has delivered its strongest growth since the (2007/8) crisis. It doesn't get more straighforward than that.”
The bald statistics bear Pringuet out. Today's results saw net profits for the 12 months to the end of June climb by 9% to EUR1.17bn (US$1.47bn) and net sales up by 7% to EUR8.22bn. Price momentum was also very positive.
However, while Pringuet praised the “exceptional” 24% sales growth in China and other Asian countries such as Taiwan (17%), he did stop to note “bipolar” Europe, where the south is dragging down a surging east.
In Europe, excluding France, the group managed a steady 2% sales growth for the fiscal year. The region makes up 26% of Pernod's total sales, so the company will be worried about the poor performance of the southern nations, especially Spain, the third-biggest spirits market in the world.
The group's Spanish sales dropped 4%, while Italy and Greece both dropped 13% as their economies continue to struggle. Gains in Germany (5%), Belgium (2%) and Netherlands (7%) were not enough to salvage a spluttering Western Europe, which overall saw sales decline by 1% for Pernod.
In France, the excise duty hike at the beginning of the year has hit the group hard, especially in its pastis sector, which has seen about EUR2 added to the price of a bottle. Pringuet said sales are likely to remain depressed until at least the end of this year.
In contrast, Eastern Europe was buoyant, and Pringuet probably won't be the first drinks CEO to wish he could cut Western Europe off from the world and forget about it for a time.
Eastern Europe sales jumped by 16% this year compared to 9% a year prior, Pringuet said, driven by Russia (28%) and Ukraine (25%).
Overshadowing the results was the death two weeks ago of Pernod chairman and former CEO Patrick Ricard. Patrick's nephew, Alexandre Ricard, who will step into the chairman and CEO role in January 2015 it was confirmed today, explained how the company will move on following its unexpected loss.
“The family experienced the tragic loss of Patrick but the family has been extremely united,” Alexandre said. “If there has been any doubts about family unity they have been allayed. The family has also unanimously reasserted its commitment to the group and its long-term development.”
Pringuet, who will step aside for Alexandre in 2015, said he will do so with no regrets.
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