By Dominique Vidalon
PARIS (Reuters) -Pernod Ricard reported forecast-beating annual results on Thursday, helped by price increases as the French spirits group benefited, like its rival Diageo, from drinkers trading up to more expensive spirits.
The owner of Mumm champagne, Absolut vodka and Martell cognac said that in an environment that remained volatile with high inflation, the war in Ukraine and COVID lockdowns in China, it expected a good start for the first quarter which began in July .
Pernod Ricard shares were off 1% at 181.65 euros. Brokerage Jefferies said in a note that the message on the first quarter was reassuring, but noted there was no specific profit guidance for fiscal year 2023.
“The Summer months were good across markets”, Chairman and CEO Alexandre Ricard told Reuters by telephone, adding he was confident on Pernod Ricard’s ability to achieve further price increases this fiscal year.
The world’s second-biggest spirits group said that with recurring free cash flow at a record 1.926 billion euros ($1.93 billion), it was offering shareholders a 32% dividend hike to 4.12 euros per share and a new buyback scheme worth 500 million to 750 million euros for fiscal year 2022/23.
Over the twelve months to June 30, the firm’s profit from recurring operations reached 3.024 billion euros, an organic rise of 19%, above analysts’ forecast to an 18.1% rise.
Sales reached 10.701 billion euros, an organic rise of 17%, with sales up 8% in the key U.S. market, 5% in China and 26% in India.
Pernod said that it gained market share in most markets, and price increases across markets averaging mid-single digits offsetting the impact of cost inflation.
Resilient consumption by people staying at home as well as the reopening of bars and restaurants and a rapid recovery in travel, helped boost sales, it said.
The group also said that over financial years from 2023 to 2025 it was confident to deliver its mid-term goal.
Pernod has said it would aim to deliver annual organic sales growth at the upper end of a 4-7% growth range over the mid-term. It also aims to lift its operating profit margin by 50-60 basis points per year, provided it could deliver annual organic sales growth within the 4-7% range.
$1 = 0.9989 euros)
(Reporting by Dominique Vidalon, editing by Tassilo Hummel, Tomasz Janowski & Simon Cameron-Moore)
