Pernod Ricard is more optimistic about its outlook for fiscal year 2022 after strong demand in the United States, China and Europe helped the French spirits maker beat first-half profit and sales forecasts, lifting its shares by over 3%.
Pernod Ricard, which owns Absolut vodka, Martell cognac and Mumm champagne, said that it now expects "strong" sales growth in its 2022 fiscal year, which ends on June 30, despite potential disruptions tied to the COVID-19 virus.
Previously it had guided for "good" sales growth.
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The world's second-biggest spirits group said that sales growth will drive operating margin expansion, although this will moderate from the first half due to increased investments.
Resilient consumption by people staying at home, the reopening of bars and restaurants and a gradual recovery in travel retail would fuel sales growth across regions, it said.
Chairman and CEO Alexandre Ricard told Reuters, however, that it is too early to make a quantitative guidance for sales or profit growth in fiscal 2022.
"We are giving a qualitative guidance. A key unknown is the performance during the Chinese New Year this month," he said in a phone interview. "We will have more visibility in mid-March, though we remain very confident over growth momentum," he added.
Ricard later told analysts that there was a "slightly softer start" to Chinese New Year when compared to last year.
The strong first half reflected a 9% jump in sales in the United States, which is Pernod's top market, with growth driven by Jameson whiskey which benefited from strong demand in bars and restaurants. In China, sales growth was 14% with very good demand during the Mid-Autumn festival.
With recurring free cash flow of €1.4 billion as of the end of December, Pernod Ricard also increased its share buyback programe by €250 million in the first half.
Shares in Pernod Ricard, which have slipped 9% this year after rising 35% in 2021, were up 3% in morning trade on Thursday 10 February.
Alexandre Ricard told Reuters that the group will also continue to look for bolt-on acquisitions, notably to beef up its fast-growing Specialty brands portfolio.
"Although guidance remains non-quantitative, we note more positive language, 'strong' versus 'good' sales growth, with margin expansion, plus an incremental 250 million euros in buybacks for FY22 on top of the 500 million euros already announced," Trevor Sterling from Bernstein wrote in a note.
Profit from current operations in the six months to 31 December reached €1.998 billion, an organic rise of 22% that was more than analysts' expectations for a 16.7% rise.
Sales totalled €5.959 billion in the first half, representing an organic rise of 17%, compared with analysts' expectations for a 15.1% rise.
Last month, rival Diageo reported first-half sales up nearly 16%, buoyed by high-end spirits for home use while bars increased orders as they reopened after lockdowns.
Jameson Experienced Volume Growth Of 22% In H1 2022
Additionally, the Irish arm of Pernod Ricard, Irish Distillers, has today announced results for the first half of its financial year (ending 31 December 2021), which reveal that Jameson sales increased by 22% to 5.8 million cases (+22%) in the first six months of the financial year to December of 2021, which was the highest ever H1 volume for Jameson. Irish Distillers said that, during the six months to the end of December 2021, Jameson recorded volume growth in key markets including the US (+8%), the UK (+16%) and South Africa (+41%), and, within the broader Jameson family, Jameson Black Barrel recorded growth of 35% globally compared to the same period last year. Meanwhile, Redbreast experienced record volume growth of 19% during the period, and the Spot range recorded volume growth of 7%, which was its highest ever half year volume growth, according to Irish Distillers.
Irish Distillers also said that both Jameson and Irish Distillers' prestige portfolio of whiskeys performed strongly in Ireland, with Jameson experiencing volume growth of 13% compared to the same period the previous year.
Irish Distillers chairman and CEO Conor McQuaid stated, "In the first half of the financial year, we saw the world begin to cautiously return to pre-pandemic activities with the return of international travel, social engagements and in-person events in some markets. This improving situation supported the growth of our full portfolio of Irish whiskeys led by Jameson, which sold 5.8 million cases in the first six months of our financial year.
"Jameson is in growth in all key regions around the world, demonstrating the ever-increasing affinity for the brand on a global level. New generations of consumers and changing lifestyles are boosting this growth and we will continue to ignite, or in many cases re-ignite, a passion for Irish whiskey in markets around the world.
"While Redbreast and the Spot family continued to drive growth in our prestige portfolio, we are confident that the quality and variety of the broader portfolio will support all our premium and super-premium whiskeys in growing from strength to strength.
"We fully recognise the difficulties our on-trade partners have faced recently. However, as the public health situation improves, we look forward to supporting them as they hopefully return to a more normalised and sustained operating environment."
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