Pernod Ricard confident over FY as Q1 sales beat expectations

3:18 am Thursday, October 20th, 2022

By Dominique Vidalon

PARIS (Reuters) -Pernod Ricard said on Thursday it was confident sales growth would remain dynamic through its 2023 fiscal year after it delivered forecast-beating sales in the first quarter helped by price increases as consumers trade up to its premium spirits.

Pernod, the world’s second-biggest spirits group behind Diageo, successfully raised prices in the United States, its top market, in the quarter while demand was strong in China during the Mid-Autumn festival and in India and a rebound in global travel retail continued.

“I am hugely encouraged by our start to the year,” Chairman and CEO Alexandre Ricard said in a statement.

In an environment that remained volatile with high inflation, the war in Ukraine, and COVID-19 lockdowns in some Chinese cities, the group said it expected sales growth for the full year would remain “dynamic and broad-based, albeit moderating on a normalizing comparison basis,”

It however did not provide a quantitative guidance for the full year.

By 0702 GMT, Pernod Ricard shares were down 1.1% at 177.95 euros.

RBC analysts said in a note the quarterly performance was “good” but noted that: “U.S organic sales growth of 2% is somewhat concerning…it seems that the U.S market is slowing.”

Pernod Ricard’s fiscal year started on July 1.

For the first quarter ended Sept. 30, Pernod – which owns Martell cognac, Mumm champagne and Absolut vodka – reported sales of 3.308 billion euros ($3.23 billion), a like-for-like rise of 11%, which came above market expectations for a 9.3% sales rise.

In China alone, sales rose 9% in the first quarter thanks strong mid-Autumn festival sales. The Martell cognac brand recorded double-digit sales growth during the quarter despite COVID restrictions.

Sales in global travel retail rose 24% in the first quarter as it continued its recovery outside of China and was on track to deliver profit back to pre-COVID levels, the group said.

($1 = 1.0234 euros)

(Reporting by Dominique Vidalon, editing by Tassilo Hummel, Raju Gopalakrishnan and Tomasz Janowski)