The world's biggest spirits makers Diageo and Pernod Ricard beat forecasts today with strong sales growth in the first three months of 2011 as buoyant emerging market growth offset a weak Europe.
Both gained from growth in Asia, Latin America and Africa and gradual recovery in North America which helped to offset weakness in Europe, hit hard by tough economic conditions in Ireland, Greece and Spain.
The figures mark a continued improvement in trade, which picked up in 2010 after suffering throughout most of 2009 when the global downturn prompted consumers to move to cheaper drinks and wholesalers to use up stocks rather than make new orders.
Diageo, the maker of Guiness, Smirnoff vodka and Johnnie Walker whisky, reported its third quarter January-March underlying sales rose 7 per cent.
French rival Pernod, which makes Jameson Irish whiskym Absolut vodka and Martell cognac, reported quarterly underlying sales up 5 per cent.
Both reaffirmed their targets for the current year. Diageo said it was looking to beat last year's operating profit rise of 2 per cent for the year to end-June 2011 and Pernod said it was aiming for an annual profit rise close to 7 per cent.
Diageo chief executive Paul Walsh said although trading in Europe was challenging, North American consumer trends were improving and its emerging markets were driven by the strength of its scotch whiskies especially around the Chinese New Year.
"We remain confident that our ... marketing investment together with the increased investment we have made in emerging markets in the year will continue to deliver improved performance," he said in a trading update.
Pernod chief executive Pierre Pringuet said the group recorded strong sales growth of 15 per cent in emerging markets and saw flat sales in mature markets during the quarter.
"The third quarter 2010/11 confirmed the improved business trends since the start of the financial year and strengthens our confidence in our ability to meet our targets," he said.
Shares in both companies have risen around 10 per cent from mid-March lows on hopes of continued recovery and emerging market growth. Pernod shares are trading on 14.5 times forecast 2011/12 earnings. Diageo is slightly behind on a 14.2 multiple.
Diageo shares closed yesterday at £12.12 and Pernod at €66.98.
Reuters
