Strong growth for Jameson as consumers embrace premium whiskey
Pernod Ricard vows to improve profit margins as activist investor targets firm
Irish Distillers chief executive Conor McQuaid: “As these results demonstrate, the great growth story continues across the portfolio.”
Irish Distillers reported strong growth across its product portfolio in the first half of the year as consumers embraced premium whiskey.
The Jameson brand saw volumes rise 6 per cent in the six months ending December 31st, selling 4.2 million cases during the period. Its premium Black Barrel range grew 26 per cent over the period.
The company said single-pot still Irish whiskey was continuing its resurgence, with Redbreast increasing sales value by 20 per cent and the Spot range growing by 43 per cent over the six-month period. Irish Distillers has released more than 10 new single-pot still Irish whiskeys since May 2011.
Meanwhile, the company’s Method and Madness range grew 12 per cent, with the company saying it reflected increasing appetite for innovation in the category. Powers recorded growth of 4 per cent in Ireland.
“As these results demonstrate, the great growth story continues across the portfolio, but particularly at the higher-end categories of Irish whiskey. Jameson, which has been driving the growth of the category for the past 29 years, continues to thrive and is now in double- or triple-digit growth in more than 70 markets across the world,” said Conor McQuaid, chairman and chief executive of Irish Distillers. “Standout regions where we expect future growth to come from included Sub-Saharan Africa, which saw 40 per cent growth (excluding South Africa), and Asia, where India saw 50 per cent growth.”
Meanwhile, parent company Pernod Ricard, which is being targeted by activist investor Elliott, vowed to improve profit margins and shareholders’ returns in a new three-year strategy plan.
French spirits group Pernod also raised its profit growth outlook for the 2018/19 full year after first-half operating profits beat forecasts, helped by strong demand for premium cognac in China.
US activist fund Elliott, which has built a stake of just over 2.5 per cent in Pernod, has called on the family-backed group to raise profit margins to bring them more into line with Diageo. Elliott also wants Pernod to improve its corporate governance.
Pernod Ricard said on Thursday that its goal for the 2019-21 period was to lift operating profit margin by 50-60 basis points per year, provided it could deliver annual organic sales growth of 4-7 per cent, having achieved 6 per cent in the 2017/18 year.
The company also announced a new round of €100 million in cost savings, to drive this margin expansion.
Pernod added it would progressively raise its dividend payout ratio to 50 per cent of net profit from recurring operations by 2020, compared to 41 per cent at present.
For the current year ending June 30th, 2019, Pernod Ricard is now targeting an organic rise of between 6-8 per cent in profit from recurring operations, having achieved a forecast-beating 12.8 per cent rise in those profits in the first-half which came in at €1.65 billion. This compared to a previous forecast for 5-7 per cent growth.
– Additional reporting: Reuters