((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
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The turnover for the financial year is now stable, whereas it was previously growing
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Reduction of share buyback from 500 to 800 million euros to 300 million euros
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Anticipates a better second half and maintains its medium-term objectives
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Stocks rise more than 6%
(Added investor commentary to paragraphs 7 and 8, presentation of Diageo to paragraph 9 and stock update) by Dominique Vidalon and Emma Rumney
Pernod Ricard’s actions
PERP.PA rose more than 6% on Thursday as the French spirits maker maintained its long-term growth ambitions, even as it lowered its revenue estimates for the whole year and its share buyback program.
The world’s second-largest spirits maker, which has faced difficulties in its key markets of the United States and China, said it now expects annual sales to be stable, as it previously forecast growth.
It also reduced its share buyback program for the current financial year to 300 million euros ($322 million), instead of the 500 million to 800 million previously planned.
But the maker of Martell cognac, Mumm champagne and Asbolut vodka said it was still targeting sales growth close to 7% in the medium term – towards the top of its range, reassuring some investors who feared a reduction in his ambitions.
Longer term, the challenges in the United States should ease, the company still has plenty of room to expand in China as revenues rise, and it should benefit from demographic trends, “urbanization and economic growth in India,” said Alexandre Ricard, the company’s managing director.
“These fundamentals have not changed,” he told analysts.
“It’s very, very good news,” Marco Scherer, portfolio manager at Metzler Asset Management, a Pernod investor, said of Pernod’s decision to maintain its mid-term ambitions.
Pernod also managed to slightly improve its operating margins despite a difficult environment, he added, adding that the company was well managed.
While Diageo DGE.L, Pernod’s main rival, also maintained its medium-term target of 5-7% organic net sales growth in its latest results, it said growth would be lower than that. figure in 2025.
Edward Mundy, an analyst at Jefferies, said in a note that Pernod’s mid-term ambitions and hopes for a better second half could indicate a better performance than its biggest rival.
Pernod shares, which have fallen around 15% over the past 12 months, are cheap given their medium-term potential, he added.
Pernod had counted on signs of improvement in the United States and China during the second quarter, but they did not materialize.
Overall, half-year sales were down 3% on an organic basis, in line with analyst expectations.
Pernod shares were up 3.7% at 1004 GMT.
(1 dollar = 0.9314 euros)