Pernod FY profit up 13% as China bounces back

Pernod Ricard’s net profit totalled €1.39 billion (US$1.65bn) in 2016/17, driven by a return to sales growth in China, a strong performance from its international brands, and tight cost control management.

Net profit totalled €1.39bn in 2016/17, driven by return to growth in China

In the French group’s full financial year ending 30 June, sales grew by 3.6% organically – without the impact of currencies and acquisitions – to reach €9.01bn (US$10.7bn).

Pernod, maker of Jameson and Chivas Regal, credited the acceleration in part to the performance its Strategic International Brands, which were up by 4% on the previous year.

The group highlighted a return to growth for Cognac brand Martell and vodka brand Absolut, up by 6% and 2% respectively.

Geographically, improvements were driven by the US, Eastern Europe, Global Travel Retail and China – which returned to sales growth for the first time since 2013.

Meanwhile the Americas region grew by 7%, Europe was up by 3% and Asia-Rest of World enjoyed a 1% sales boost.

A third of the group’s growth was driven by innovation – new products or line extensions of existing brands.

In January, the group introduced a lime variant for Absolut, and launched caviar-infused vodka brand, L’Orbe in March.

Pernod Ricard continued to actively manage its portfolio in 2016/17, acquiring majority stakes in Smooth Ambler, and Del Maguey, and disposing of vodka brand Frïs, brandy and sherry business Domecq, and the Glenallachie distillery. The firm also acquired a majority stake in Corby Spirit & Wine, owner of the Ungava gin brand.

Fourth quarter sales rose by 3% organically and 5% on a reported basis – taking into account the impact of exchange rates and acquisitions – “broadly consistent” with underlying trends.

Alexandre Ricard, chairman and chief executive officer, said: “FY17 was a strong year, delivering profit from recurring operations in line with guidance together with an excellent cash performance.

“These results demonstrate that the strategic direction the Group adopted two years ago is delivering: growth is accelerating and diversifying through successful activation of our strategy.”

Looking ahead, he said Pernod will continue to implement its roadmap, focusing on digital, innovation and operational excellence.

“We are confident that we will continue improving our business performance. As a consequence, our guidance for FY18 is organic growth in profit from recurring operations between +3% and +5%,” he added.