Pernod Ricard SA, France’s largest distiller, reported first-half earnings that beat estimates as sales in markets including China, Russia and the U.S. offset declines in southern Europe and France.
Operating profit excluding some items rose 5.8 percent to 1.46 billion euros ($1.96 billion) in the six months through December from 1.38 billion euros a year earlier, the maker of Absolut vodka said today in a statement. The median estimate of 11 analysts was 1.43 billion euros. Profit advanced 1 percent on a so-called organic basis, compared with a 0.5 percent median estimate.
Sales and profitability increased at Pernod’s Asia/Rest of World unit as the company sold more cognac and were only “marginally impacted” by the Chinese New Year delaying shipments. Sales in the Americas rose 6 percent, driven by “solid growth” in the U.S. for its major brands, including Jameson whiskey.
“Overall this looks to be a reasonably solid performance,” Phil Carroll, an analyst at Shore Capital, wrote today. “Normally Pernod guidance is particularly cautious and it easily overdelivers, but in the current year we expect 6 percent profit growth to be just that” as tough conditions in France restrict improvements.
European Pressure
Paris-based Pernod said in October it expects full-year organic earnings growth to decelerate to about 6 percent on waning sales growth in emerging markets and as the company experiences continued pressure in Europe.
Pernod’s shares rose as much as 2.7 percent, the biggest intraday increase in five months, and were up 2.3 percent to 96.20 euros at 9:11 a.m. in Paris trading. The stock has added 10 percent this year, giving the distiller a market value of 25.5 billion euros.
Sales rose 3 percent excluding acquisitions, disposals and currency fluctuations, compared with an estimated 2.2 percent increase. Sales edged up 1 percent in the second quarter, the company said.
Competitor Remy Cointreau SA has said that Asian sales have been “very strong” even as the Chinese New Year fell on a later date this year than in 2012, leading to revenue being booked in a later quarter for them. Whisky sales in Asia slowed, as demand waned in South Korea, Pernod said.
China Recovering
“We highlighted that the overall environment is not as buoyant as last year, so we keep a certain degree of caution,” Pierre Pringuet, Pernod’s chief executive officer, said today by telephone. “The good point, to me, is that technically for China there’s no longer speculation about a slowdown. It’s recovering.”
Sales in Europe showed an ongoing “bipolarization,” Pernod said, as demand improved in Russia while western and southern Europe, including Spain, stayed challenging. Organic sales slid 1 percent. Sales in France, its home market, declined comparatively as a tax increase at the start of 2012 inflated first-half sales a year ago. Eurozone sales represented 20 percent of its revenue this half, the company said.
Pringuet said today that he didn’t expect further economic deterioration in Spain, barring another widespread fiscal shock.
Diageo Plc, the world’s biggest distiller, has reported profit growth of 9 percent for the six months through December as it shifted away from the depressed economies of Europe.

Source: Bloomberg

Earnings announcement from Pernod Ricard