Pernod Ricard sees good start to Q1 after results beat forecast By Reuters

By Dominique Vidalon

PARIS (Reuters) – Pernod Ricard (EPA:) on Thursday posted a stronger-than-expected 19% organic rise in its full-year 2021/22 operating profit, driven by strong demand for its premium spirits in Europe, China and the United States and cost control.

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 “dynamic broad based sales growth, on a normalizing comparison basis, with a good start to the first quarter” which started in July.

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’ 18.1% forecast.

Sales reached 10,701 billion euros, an organic rise of 17%, with sales up 8% in the key US market, 5% in China and 26% in India.

Pernod said that it gained market share in most markets and price increases across markets of mid-single digit on average, offsetting the impact of cost inflation.

Pernod has benefited, like rivals Diageo (LON:), from drinkers trading up to more expensive spirits since the start of the pandemic. Resilient consumption by people staying at home as well as the reopening of bars and restaurants and a rapid recovery in travel, also 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.

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