just On Call - Pernod Ricard Plans Absolut Push
Absolut regains its glimmer in Pernod Ricard full-year
The French drinks giant intends to launch its Absolut Elyx in 28 new markets in its current fiscal year, group CEO Pierre Pringuet told analysts today (1 September). The strategy will help to reduce Absolut's over-reliance on the US and build on the vodka brand's new-found momentum.
Absolut was one of several brands to reach record volumes in a spirited full-year for Pernod, the group announced today. For the 12 months to the end of June, Absolut sales rose by 6% in volume and value. Although the brand returned to volume growth in the US, it has shown particular promise in new markets, especially Brazil.
Pernod Ricard's ongoing expansion plans for Absolut are evidence of the company's confident mood. For its full-year, the firm reported global net sales up by 8%, to EUR7.64bn (US$11bn). Net profits increased by 10% on the previous 12 months, to EUR1.08bn.
Emerging markets in Asia and Latin America led the charge for Pernod. Other brands reporting record volume sales for the year included Chivas Regal, Jameson, Martell, Havana Club and The Glenlivet. The group said that it increased prices on its top 14 brands by an average 1.4%.
Marketing spend as a percentage of sales, meanwhile, rose to 18.9%, versus 17.8% a year earlier, putting Pernod at the forefront of industry spending on advertising and promotions. Half of the extra spending has been directed to emerging markets, the group said.
In Europe, Pernod Ricard has found life more difficult, although not as tough as Diageo by virtue of a different geographic spread. Net sales for Europe were flat for the year, with Western Europe down by 2%. Pringuet said that the group has "a number of voluntary departure plans in Spain and Greece". He added: "We have been achieving savings on structural costs, while continuing to invest in emerging markets."
The firm said that it has created subsidiaries in Vietnam and Sub-Saharan Africa to aid its push into fast-growth markets. In the US, meanwhile, Pringuet said that consumers' renewed thirst for premium spirits "has been confirmed" and that a return to growth in the on-trade is "reassuring".
At the corporate level, debt - rather than big acquisitions - continues to concentrate minds in Pernod Ricard's finance department, according to the firm. "our objective is to become investment grade," said group CFO Gilles Bogaert. The group wants a net debt to EBITDA ratio of "close to four" by the end of its current fiscal year, versus a ratio of 4.4 in June this year.
On an organic basis, analyst group Sanford Bernstein noted that Pernod Ricard's net sales and operating profits rose more quickly than at Diageo, which works to the same financial year.
Pernod Ricard has launched a television advert for its Royal Salute Scotch whisky brand in China....
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