Pernod Ricard today (31 August) posted annual results that beat market expectations but the French giant’s caution over sales in the US and China hit its share price.
The Jameson whiskey owner booked a 10% rise in organic sales and an 11% increase in underlying operating profit for the year to the end of June.
According to analysts at AllianceBernstein, the consensus forecast was for sales to grow 9.5% on an organic basis and for Pernod Ricard’s recurring operating profit to be up 10.2%.
Alexandre Ricard, the Martell Cognac owner’s chairman and CEO, said the company had “once again delivered a very strong full-year performance”.
Nevertheless, turning to Pernod Ricard’s new financial year, the company said it expects its sales in the US and China to decline in the first quarter.
In the US, the group pointed to a “high comparison basis” with the opening three months of the previous financial year. The Mumm Champagne owner cited a “challenging macroeconomic environment” in China.
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Pernod Ricard said it has a “positive outlook” for its business in the US for the rest of the financial year. It added it expects the comparative pressures to ease in China from the second quarter onwards.
In the 12 months to the end of June, the group saw “stable” net sales in the US. It reported a 2% rise in “underlying value depletions”.
Pernod Ricard said its business in the US had seen a “very strong price effect”, which it quantified as being at a “high-single-digit rate”.
It pointed to “good value growth” in depletions for brands including Jameson, Kahlua and Malibu. There was a “modest decline” for Absolut vodka, the company added.
Pernod Ricard posted a 17% increase in net sales from its Asia/Rest of World reporting unit. The company said the “excellent, broad-based growth” was led by India, China, Turkey and a recovery in the travel-retail channel.
The growth in China was “driven” by Martell and “strong momentum” for Absolut and Jameson.
Group net sales rose 13% to €12.14bn ($13.19bn). Profit from recurring operations was up 11% at €3.35bn. Net profit was 12% higher at €2.28bn.
In a note to clients, analysts at AllianceBernstein said Pernod Ricard had reported “a strong set of results, reiterating their midterm guidance of aiming at the top end of 4%-7% organic net sales growth, plus a forecast of organic margin expansion in FY24”.
They added: “However, commentary of a soft start in Q1FY24, with expected net sales declines in both the USA and China might weigh on sentiment.”
Shares in Pernod Ricard, up 0.05% so far in 2023, were down 4.79% on the day at €185 at 13:08 CEST.
Ahead of the publication of the results, the group yesterday (30 August) announced changes to its organisation it hopes will make the company more efficient and able to make decisions faster.
In a statement, Pernod Ricard said the changes “will ensure even greater efficiency at all levels of the company” as well as “a closer proximity and reactivity to the dynamic global marketplace”.