Ongoing Seagram integration boosts Pernod Ricard results

French wine and spirit group Pernod Ricard is continuing to reap the benefits of its acquisition of part of the Canadian spirits group Seagram in 2000, reporting a further increase in sales for 2002, mostly as a result of the addition of a number of strong Seagram brands.

Paris-based Pernod said its sales for the year to 31 December were €4.8 billion, up 6 per cent on the previous year, but sales from the core wine & spirits division posted 78 per cent growth to €3.4 billion, due mainly to the integration of Seagram brands.

Sales of Seagram brands amounted to €1.4 billion during the year, Pernod said, a rise of 3.8 per cent on the 2002 pro-forma figure, despite a €97 million adverse currency impact (-7.1 per cent). Pro-forma organic growth was 2.8 per cent. A €65 million impact of consolidation changes (+4.8 per cent) was attributable chiefly to sales of former Seagram brands Sandeman and Four Roses, not included in the acquisition of the Canadian firm but for which Pernod Ricard is now the distributor.

But Pernod's own strong brands continued to grow as well as the newer Seagram products. The core Pernod wine and spirits brands improved their sales by 3.8 per cent in 2002 to €1.99 billion, with organic growth of 4.4 per cent offset by a 2.5 per cent adverse currency impact.

Among the core Pernod Ricard brands, the best performers were Amaro Ramazzotti, the Italian bitters brand which posted 14 per cent growth, Australian wine Jacob's Creek and Cuban rum Havana Club, both with 12 per cent for, and Irish whiskey brand Jameson with 7 per cent.

The anis brands which give the company its name had something of a torrid time in the first nine months of the year, but clawed back some of the ground lost by the end of the year, with Ricard sales down 2.9 per cent and Pastis 51 down 2.6 per cent for the 12 months. Consumption was down mainly as a result of the poor summer weather.

Since its decision to acquire the Seagram business, Pernod Ricard has been steadily selling off its non-core operations, many of which it had acquired only a few years earlier (such as the BWG drinks wholesale operations in the UK and Ireland). Sales from these few remaining non-core businesses in 2002 reached €1.4 billion, a rise of €62 million on the period to end September 2002.

The good sales figures, which came despite continuing troubles in Latin America and poor exchange rates, mean that Pernod Ricard should be able to meet its targets for 2002 - increasing profitability from wines & spirits, lifting earnings per share and reducing its debt burden. Full results will be released later this year.