Pernod Ricard reports strong sales
French distiller Pernod Ricard said it expects earnings to increase at a slower pace this year after western European liquor sales declined in the fiscal first quarter.
So-called organic operating profit will rise "close to 6 per cent" compared with a 9 per cent gain last year, the company said today in a statement.
Organic sales rose 5 per cent in the three months ended September 30, a slower pace than the 6.2 per cent median estimate of 13 analysts surveyed by Bloomberg, as growth in China and India offset declining results in France, where tax increases reduced sales, and in western Europe.
"Even if Pernod is unusually prudent early in the year, we think consensus expectations are too high" for earnings growth this year, Laetitia Delaye, an analyst at Kepler Capital Markets in Paris, wrote today.
Pernod, the maker of Absolut vodka and Chivas Regal whisky, said in August it expects a slowdown in the pace of global economic growth this year as Europe is stymied by the lingering bond-market crisis and government debt-reduction measures.
Larger competitor Diageo said last week that it's confident the company will boost profitability in the medium-term, though the global economy remains "uneven." Pernod shares traded at €84.71, up 0.15 per cent, at 9.26am in Paris after declining as much as 2 per cent earlier in the trading day.
The stock has advanced 18 per cent this year. Diageo dropped 0.4 per cent in London, for a gain this year of almost 25 per cent.
"In a less favourable macroeconomic environment we realized a good overall performance in the first quarter," chief executive officer Pierre Pringuet said in the statement.
Pernod faces tough comparative earnings figures after sales gained 11 per cent last year, he added.
Sales plunged 6 per cent in western Europe and rose 14 per cent in eastern Europe, marking an ongoing "bipolarization" across the continent, Pernod said.
Revenue gained at a "double-digit" pace in developing markets, where distillers are betting on rising incomes to drive growth.
Revenue increased by 14 per cent in the Americas as US drinkers bought more Jameson whiskey and Malibu rum.
US shipments for Christmas indicate a positive holiday season, Mr Pringuet said today.
In a "less favourable environment" in China, sales still improved 18 per cent, driven by sales of Martell cognac.