Pernod Ricards Chivas brand has found strong growth

Pernod Ricard's Chivas brand has found strong growth

Executive changes and strong price momentum bode well for Pernod Ricard's future, analysts have said, but weaker than expected operating profits are a cause for concern.  

The group posted a 9% rise in full-year net profits today (30 August), boosted by sales growth in all regions except France. The price/mix growth for Pernod's top 14 strategic brands was 6%, with leading brand Chivas posting 11% growth and Royal Salute 23%.

But while the appointment of Alexandre Ricard to the roles of Pernod Ricard's CEO and chairman from January 2015 will play well in the market, analysts Nomura said, operating profit (EBIT) was “slightly light, given investment”.

The miss was due to higher costs from establishing distribution networks in new markets Vietnam and Sub-Saharan Africa and increased marketing spend, Nomura said.

Analysts at Investec said “question marks will remain” on the Absolut brand's relatively weaker 3% price/mix momentum but praised Pernod's “impressive” on-going growth in Asia and a firm top-line in Americas.

Pernod's Asia performance also impressed Nomura, which said investor concerns that the company was not active enough in regional acquisitions are overdone.

“Although we would accept that M&A has become a Diageo story for now,” the analysts added.