Pernod Ricard Cautions Of Slower Growth After Stellar Quarter
Demand in China and India powered a 10.4% rise in quarterly sales for France's Pernod Ricard, helping the maker of Absolut vodka and Martell cognac offset slower progress in its main US market.
Pernod, the world's second-biggest spirits group behind Britain's Diageo, however cautioned sales growth would moderate in the full 2018-19 financial year, notably for Martell cognac in China after a stellar first quarter.
Chief Executive Alexandre Ricard told Reuters his group was closely monitoring trade tensions between the United States and China, although the company had yet not seen any impact from it on demand for its products in China.
He predicted Chinese sales would still grow at a double-digit pace this year.
Pernod said that despite an uncertain geopolitical and monetary environment, it was keeping its forecast for a 5% - 7% organic rise in full-year profit from recurring operations after last year's 6.3% growth. Its financial year runs until the end of June.
"The consensus is at the high-end of this range at 6.8%, while the Asia results are strong, the company is clearly indicating that investors cannot rely on that kind of growth in Asia," said Liberum analysts in a note.
"In light of some softer results in the US and Europe, we wonder if consensus might drift back towards the mid-point of that range," they added.
Pernod's first quarter sales came in at €2.387 billion, a like-for-like rise of 10.4% that beat analysts' estimates for 7.4% like-for-like growth.
Chinese New Year, Cognac And Whiskey
Pernod said it benefited from advance shipments in China ahead of the Mid-Autumn and Chinese New Year festivities and from a low year-ago comparison in India, where it has faced setbacks including a ban on liquor outlets.
The group, whose other brands include Jameson whiskey, said sales in India rose 34% in the quarter, while in China sales leapt to 27% in the first quarter, led by strong demand for Martell cognac and by double-digit growth in Chivas whisky.
Pernod said it would benefit in the first half from the earlier timing of the Chinese New Year, but growth would then moderate.
In the United States, where sales were up 2% in the quarter, Jameson whiskey continued its double-digit growth but the Absolut vodka brand was still in decline.
Pernod tied the overall slower growth in the US to high year-ago comparables when demand had been boosted by strong demand in anticipation of price hikes in Jameson whiskey and Tequila notably in California, but said the underlying trend remained broadly in line with that of a growing market.