Pernod Ricard beats forecasts, cautious on full year

French spirits maker Pernod Ricard, which owns Irish Distillers, on Thursday forecast modest profit growth in its current financial year after improving demand in Asia helped sales beat forecasts in the first quarter.

The world's second-biggest spirits group behind Britain's Diageo said it remained cautious for the current year, predicting a gradual improvement in sales in an environment that it said would remain "difficult".

Pernod forecast growth in underlying profit from recurring operations of between 1 and 3 per cent for the year ending June 30th, 2015. That would compare with profit growth of 2 pe rcent achieved in fiscal year 2013/14.

Pernod relies on Asia for about 38 per cent of its sales and 43 per cent of its operating profit. Like its rivals, including smaller peer Remy Cointreau, it has been hurt by a government clampdown on luxury gifts in China, in addition to the slowdown in economic growth in the country.

Diageo and Remy have, however, forecast improving sales this year as they navigate past problems in China.

Pernod, the owner of Mumm champagne, Absolut vodka and Martell cognac, said revenue for the first quarter ended September 30th was €2.037 billion, a like-for-like rise of 2 per cent and a rebound from a 2 per cent decline in the fourth quarter of 2013/14.

The company-compiled consensus of analysts was for underlying sales growth of 1.5 per cent in the quarter.

The company said net sales of Jameson rose 9 per cent.

In Asia, like-for-like sales rose 4 per cent in the quarter while in America, where it makes 27 per cent of group sales, revenue rose 3 per cent.

In Europe, where Pernod makes 35 per cent of revenue, sales were still down 1 per cent.

Pernod shares have gained 4.4 per cent so far this year, in line with the European sector, which is up 4.1 per cent.

Reuters