(Updated with details, context, statements by the CEO, stock price)
PARIS, Feb 10 (Reuters) – The wine and spirits group Pernod Ricard was more optimistic on Thursday for its 2021-2022 financial year after a first half driven by solid demand in the United States, China and Europe.
The owner of Martell cognac and Absolut vodka now expects “very good” sales growth for its full fiscal year, which will end at the end of June, despite possible pandemic-related disruptions.
He had previously indicated that he was counting on “dynamic” growth in annual sales.
Pernod Ricard is also targeting an improvement in the current operating margin rate and “strong” cash generation for 2021-2022 despite the increase in investments intended to support growth.
The continued rebound in “On-Trade” activities (consumption in bars and restaurants), the resilience of “Off-trade” (consumption at home) and the gradual recovery of “travel retail” (distribution in places of transport ) should support sales growth in all regions, Pernod Ricard said.
The group’s CEO, Alexandre Ricard, however told Reuters that it was too early to give a numerical forecast for sales or profit growth for the year.
“We are giving qualitative guidance. The weighty unknown is the Chinese New Year,” he explained in a telephone interview.
“We will see more clearly around mid-March. We are very confident about the dynamics,” he added.
During a conference with analysts, Alexandre Ricard later indicated that the group had experienced a “slightly weaker start” to the Chinese New Year compared to last year.
On the Paris Stock Exchange, the action fell 0.10% to 191.7 euros at 12:46 p.m., after gaining up to 3.7% earlier in the session.
ACCELERATION OF SHARE BUYBACKS
In the first half, Pernod Ricard’s sales increased by 9% in the United States, the group’s largest market, thanks to strong demand for Jameson whiskey in bars and restaurants. In China, sales increased by 14%.
In total, the so-called internal revenue growth (excluding variations in exchange rates and changes in scope) reached 17%, at 5.959 billion euros.
As expected, organic growth slowed in the second quarter ended at the end of December to return to 14%, after 20% in the first, due to a higher comparison base.
In the first half, current operating income reached 1.998 billion euros, a record amount, representing organic growth of 22%.
Pernod Ricard, which generated current free cash flow of 1.383 billion euros in the first half, announced an acceleration of its share buyback program, with around 250 million additional euros, bringing the total to 750 million on exercise. (Report Dominique Vidalon, Blandine Hénault for the French version, edited by Marc Angrand and Sophie Louet)