Pernod third quarter results

29 April, 2010

Pernod Ricard has announced that its consolidated sales for the third quarter 2009/10 are up 14% go €1,538 million compared the same period in 2008/9.

This meant 16% organic growth, a 2% positive foreign exchange effect and a 3% negative group structure effect.

The company says the reulsts are due to:

-       significant increase in consumption in new economies;

-       improved situation in some key markets, US, Russia, duty free, for example;

-       favourable “technical effects” such as destocking in 3rd quarter 2008/9, earlier easter and later Chinese new year celebrations.

The company goes on to state:

The 15 strategic brands grew at a faster rate of 21% over the quarter.

Over the first nine months of the year (July 1 2009 to March 31, 2010), cumulative consolidated sales totaled €5,326 million, compared to €5,557 million the previous year. This development resulted from:

• renewed organic sales growth, which turned positive by 2%;

• a 3% negative group structure effect, primarily due to the termination of Stolichnaya distribution and the disposals of Wild Turkey and Tia Maria;

• a 3% negative foreign exchange effect, largely due to the Venezuelan Bolivar and the depreciation of the US dollar.

At March 31, 2010, the 15 strategic brands declined by 1% in volume but grew by 3% in value due to a favourable price/mix effect. The best performing brands in value were Martell (+16%), Jameson (+11%), Absolut (+9%), The Glenlivet (+6%), Havana Club (+3%), Ricard (+3%) and Chivas (+1%).

Others were stable or declined moderately, such as Montana (stable), Beefeater (-1%), Jacob’s Creek (-2%) and Malibu (-2%). Mumm and Perrier-Jouët posted declines of -9% and -11%, respectively, but an improvement was noted over the third quarter.

The 30 key local brands confirmed their resilience, reporting +3% growth in volume and +4% in value. This performance was largely due to the vitality of Indian whisky brands Royal Stag (+28%), Blender’s Pride (+19%) and Imperial Blue (+30%), Imperial’s confirmed growth in South Korea and Royal Salute’s recovery in Asia over the third quarter.

Over the first nine months of the 2009/10 financial year, the 15 strategic brands and the 30 key local brands totaled 58% and 22% of group sales, respectively. Premium brands represented 70% of sales, compared to 68% at end March 2009.

Asia/Rest of World isPernod Ricard’s leading geographic region.

• Asia/Rest of World: €1,746 million (+10%, being organic growth of +10%)

Very strong growth rates in India (+29%), China (+15%) and Vietnam (+75%), combined with the recovery of Duty Free and markets such as South Korea, turned Asia/Rest of World into the group’s leading region. Consumption in Thailand remained adversely affected by the tense political situation.

Strategic brands achieved growth in the Pacific region. Local wine brands declined due to the continuing refocusing on premium brands.

• Americas: €1,369 million (-10%, being organic growth of +3%)

In the US, following a first quarter of growth and a second quarter in decline, the third quarter enjoyed renewed growth as confirmed by Nielsen (+1.3%) and NABCA statistics. The on-trade market is on the way to stabilising and premium brands overperformed the market in the third quarter.

Canada was in slight decline across the range, whereas Mexico sales increased due to Absolut and whiskies.

Central and South America reported significant growth, due in particular to Chivas Regal, Absolut and Something Special.

• Europe (excluding France): €1,686 million (-12%, being organic growth of -6%)

Western Europe continued to decline overall due to the difficult situation in Spain, the UK and Ireland.

Sales grew in Sweden, Greece, Belgium and Portugal.

Central Europe remained difficult but eastern Europe noted an improvement in the third quarter, notably featuring a rebound by international brands in Russia.

• France: €525 million (-1%, being organic growth of +1%)

The good performance of the off-trade market and a lesser on-trade decline explained the resilience of the French market.

Group brands gained market shares. Ricard, Absolut, Chivas Regal, Clan Campbell, Jameson and Havana Club posted satisfactory growth, whereas Mumm turned positive according to Nielsen, featuring a positive price/mix effect, but continued to decline on-trade.

Pierre Pringuet, PR CEO said: “We are increasing our guidance for our profit from recurring operations for the full 2009/10 financial year: we now target organic growth of around 3%, compared to a range of 1% to 3% previously. We confirm our intention to step up advertising and promotion expenditure on strategic brands and markets.”

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