Pernod forecasts ‘good news’ from pound decline

The devaluation of the pound following the Brexit vote is “good news” for Pernod Ricard and is set to make the French drinks company €30 million over the next year, its finance head has claimed.

The pound sterling’s decline is set to add an estimated €30m to Pernod Ricard’s accounts over the next 12 months

Gilles Bogaert, managing director, finance and operations at Pernod Ricard, announced his estimation at a roundtable in London yesterday, following publication of the group’s financial results last week.

The UK’s vote to leave the European Union in June this year caused the pound to fall to its lowest level against the dollar in 20 years and the London stock market to plunge more than 8%.

“We think we should have a modestly positive impact from Forex,” said Bogaert. “The impact from sterling should be positive […] a weaker pound is good news for Pernod Ricard. Our estimation for F17 is that we should have a positive impact of €30 million in the next 12 months.”

He added that this positive impact could continue for a further 12 months.

Denis O’Flynn, outgoing managing director of Pernod Ricard UK, also said: “We are seeing positive momentum coming back into the market, but how it’s going to play out over the next two to three years, I do not know. It’s certainly something that’s going to flavour the market.”

Laurent Lacassagne, chairman and CEO of Pernod’s Scotch arm Chivas Brothers, also touched on discussions taking place within the Scottish government over a second referendum to gain independence from the United Kingdom following Brexit, which Scotland overwhelmingly voted against.

“As a business, Chivas is strongly rooted in Scotland and as a brand we couldn’t move,” he said. “We have to be there, but I don’t think there’s anything new to say at this stage.”

O’Flynn, who will depart Pernod Ricard next month after 16 years at the company next month, also criticised the UK government’s backing of health guidelines proposed in January that claimed there is no safe level of drinking.

The guidelines, issued by the chief medical officer (CMO), state that “there is no level of regular drinking that can be considered as completely safe” and issues identical advice for both men and women – making the UK one of just a few countries to do so.

“I am not sure what the ramifications of this might be,” said O’Flynn. “We do not accept that there’s no safe level of alcohol consumption [but] of course we need to consider how we communicate with our consumers. Storing all information in an off-bottle portal could be the way to go.”

Last week, Pernod Ricard, the world’s second-largest spirits producer, reported “solid and encouraging” single-digit sales growth in 2015/16 despite continued “difficulties” in China and within its Scotch portfolio.