Pernod Ricard in good spirits after solid full-year results

Pernod Ricard posted a stronger-than-expected 19% organic rise in its full-year 2021/2022 operating profit on Thursday, driven by strong demand for its premium spirits in Europe, China and the US 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-19 lockdowns in China, it expected “dynamic broad-based sales growth, on a normalising 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 €1.926bn, it was offering shareholders a 32% dividend hike to €4.12 per share and a new buyback scheme worth €500m-€750m for fiscal year 2022/2023.

Over the 12 months to June 30, the firm’s profit from recurring operations reached €3.024bn, an organic rise of 19%, above analysts’ 18.1% forecast.

Sales reached €10.701bn, an organic rise of 17%, with sales up 8% in the key US market, 5% in China and 26% in India. Pernod said it gained market share in most markets and price increases across markets of mid-single-digit on average, offsetting the effect of cost inflation.

Like rival Diageo, Pernod has benefited 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 it would deliver its midterm 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 midterm. It also aims to lift its operating profit margin by 50-60 basis points a year, provided it could deliver annual organic sales growth within the 4%-7% range.

Reuters