Asian spurt prompts higher Pernod Ricard profit forecast
The French spirits maker said like-for-like sales were up 7 per cent to €4282m in H1 while profits from recurring operation grew 8 per cent organically.
That profit result was enough to prompt the company to nudge up its profit forecast one percentage point to 7 per cent for the full year.
Analyst assessment
Nomura analyst Ian Shackleton issued a positive assessment of the figures but said the bank had moved in the opposite direction to Pernod Ricard regarding the full year profit guidance. It lowered its forecast one percentage point because of a small group of problem markets.
Shackleton said: “Positive commentary across all trading regions supports our view that spirits momentum is building, especially in the US.
“Although our FY11 organic estimates are marginally reduced (9 per cent to 8 per cent, and ahead of the company’s raised guidance of 7 per cent) to reflect a handful of problem markets (Australia, Thailand, Venezuela), we see momentum moving up to our medium-term model of 9 per cent pa EBIT growth in FY12.”
The biggest driver for the group at the moment is Asia - the Asia/Rest of the World region reported 29 per cent growth in H1 (17 per cent organic growth), supported by the earlier than usual Chinese New Year.
And the company posted 4 per cent organic growth in the Americas, despite a sharp decline in Venezuela, and sales in Europe returned to growth compared to H1 2009/10.
Marketing investment
To fuel these improvements on the top-line and support its strategy of pushing 14 strategic brands, Pernod Ricard has invested heavily in marketing.
Advertising and promotion spending increased 11.1 per cent to €765m last year and the management said in a statement that it intended to continue “its sustained investment policy.”
