Pernod Sales Beat Estimates on Premium Spirits
Pernod Ricard SA (RI), France’s biggest
distiller, reported third-quarter sales that beat analysts’
estimates after consumers continued to buy more expensive
spirits and demand increased in emerging markets.
Organic revenue, which excludes the effect of acquisitions,
disposals and currency fluctuations, rose 3 percent in the three
months through March 31, the company said today in a statement.
The median estimate of 11 analysts was for a 0.4 percent
increase in sales. Revenue on the same basis rose 9 percent in
the first nine months.
Pernod had “strong momentum in emerging markets, which
continued to grow double-digit, and modest growth in developed
markets,” Martin Deboo and Gideon Adler, analysts at Investec
Plc in London, wrote today. A deferred impact of distributor
restocking in France also affected earnings, said the analysts,
who have a buy recommendation on the shares.
Distributors pre-bought alcohol in France in advance of a
tax increase on Jan. 1. The company absorbed about half the
impact of the destocking in the quarter, with the rest to come
in the fiscal fourth quarter, Chief Financial Officer Gilles Bogaert said in an interview.
Pernod’s shares rose as much as 2.1 percent to 81.50 euros
in Paris and were up 0.8 percent at 9:41 a.m., extending the
gain this year to 12 percent.
Martell Cognac
“Buoyant” growth of Pernod’s main brands, including
Martell cognac, and increased “relative significance” of
premium spirits helped boost sales in the third quarter, the
Paris-based company said. Total revenue rose to 1.7 billion
euros ($2.3 billion). Excluding effects of the French tax
increase and an earlier Chinese New Year, third-quarter organic
growth would have been 8 percent.
Pernod, which sells spirits including Absolut vodka and
Chivas Regal whisky, is among companies tapping sales growth in
emerging economies including China and India to offset tough
markets in the U.S. and Europe. Nine-month sales rose 17 percent
in emerging markets including China and India compared with a
3 percent advance in mature markets.
“The underlying trends in the first half did not change a
lot in the third quarter,” Bogaert said in the interview. The
company “still sees some underlying trends which are slightly
declining” in western Europe, as tough economic conditions
restrain sales.
Profit Growth
Pernod raised its annual earnings forecast in February,
saying it expects organic operating profit growth close to 8
percent. Profit on that basis increased 17 percent in the first
half after drinkers in Asia bought more Martell cognac to
celebrate the Chinese New Year, which fell 11 days earlier than
in 2011. That brought some purchases for the festival into the
second quarter from the third.
Pernod maintained its forecast today, and Bogaert said the
third quarter was “in line with what we expected.” He declined
to comment further on profitability.
Rival Remy Cointreau SA (RCO) reported sales for the quarter
through March 31 that slid 8.3 percent due to the earlier timing
of the Chinese festival.
Pernod said yesterday that it signed a new 2.5 billion-euro
revolving credit facility with a group of 25 banks to refinance
debt from its 2008 acquisition of Vin Sprit AB, the Swedish
maker of Absolut vodka. The company said today that it has
completed its debt refinancing.
To contact the reporter on this story:
Clementine Fletcher in London
cfletcher5@bloomberg.net.
To contact the editor responsible for this story:
Sara Marley at smarley1@bloomberg.net
