Pernod Ricard reports strong sales in China, India drives profit growth

29 Aug 2018 --- The world’s second-largest distiller, Pernod Ricard SA, has reported that sales and profit growth accelerated in the full year 2017/18, driven by strong demand in China and India, as well as robust sales in the US, which is its top market.

Pernod Ricard handed investors a 17 percent dividend hike. For the year ahead, the company forecast further profit growth in spite of an uncertain geopolitical and monetary climate.

The maker of Martell cognac and Mumm champagne predicted a “very strong” first quarter, saying it would benefit from a low comparison base in India where it has faced setbacks including a ban on liquor outlets.

Profit from recurring operations should rise 5 percent to 7 percent this fiscal year on an organic basis, the Paris-based company said in a statement Wednesday. Earnings rose 6.3 percent on that basis in the 12 months through June, slightly ahead of analysts’ expectations.

“Consistent strategic implementation has enabled us to deliver a significant improvement in business performance while investing for the future,” Chief Executive Officer, Alexandre Ricard says. “In fiscal 2019, in a still uncertain geopolitical and monetary environment, we will continue consistently implementing our strategy.”

In April, the company had said that growth in profit from recurring operations would be at the top end of a previous target of between 4 percent and 6 percent.

The company also forecast a boost in the July-September period from an earlier Mid-Autumn Festival in China, where it banks on a thirst for premium drinks from a fast-rising middle-class.

Speaking of both China and India, Ricard said that the key drivers there was the emerging middle class.

“We're in investment mode, as well, in both these counties as they drive our growth, currently, and also for the medium to long-term,” he told CNBC’s “Squawk Box Europe.”

The distiller also proposed a dividend up 17 percent from fiscal 2017, reflecting the company’s accelerating profit growth and reduced debt. The payout of 41 percent of profit is within the range of 37 percent to 50 percent that Ricard had projected, as the company lifts payouts to as much as half of earnings over the next three years, according to Bloomberg.

Pernod Ricard trails British multinational alcoholic beverages company, Diageo, in revenue among global distillers.

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