BUSINESS NEWS

Pepsi revises earnings outlook…Pernod feels the domecq effect…Danone backs aqua d’or in Scandinavia…KWV sells cavendish to thierry’s…Magners shares soar

Pepsi revises earnings outlook

Carbonated drinks company PepsiAmericas has announced it is lowering its expectations for its full-year 2006 earnings per share. The company expects diluted earnings per share to be approximately US$1.35-$1.39, compared with the company’s previous outlook of the US$1.44-$1.49. This revised earnings forecast was largely driven by higher costs in its US business.

The company saw favourable US volume growth in the third quarter, up more than 2%. In order to deliver its full-year earnings targets, the company is looking to improve its single-serve volume performance and strengthen its international business.

Robert C Pohlad, chairman and CEO, says, “The package mix continues to have a negative impact on our net pricing. Our higher-margin single-serve volume has not rebounded to expected levels, despite the successful launch of Jazz. And our lower-margin take-home packages continue to grow above anticipated rates.”

He adds, “In order to regain momentum in our domestic business, we will continue to invest and build capabilities around our non-carbonated and on-premise growth initiatives.”

Pernod feels the Domecq effect

Pernod Ricard has increased its sales by 68%, mostly due to the contribution of Allied Domecq brands. The group announced the successful integration of Allied Domecq at a lower cost of o350-o400 million, rather than the o450m originally estimated.

Pernod Ricard expects to see the full o270m savings in structure costs this financial year, a year earlier than initially planned.

The transferral of a number of Allied Domecq brands to Fortune Brands, and the disposal of non-key assets, enabled the French group to lower its debt levels by o3,600m to o6,351m.

Total sales for the financial year, which amounted to o6,066m, were also driven by growth in Pernod Ricard’s original portfolio. Most of its premium and deluxe brands, including Chivas, Martell, Jameson and The Glenlivet, recorded double-digit growth.

Once again, Asia/rest of world and the Americas were the main engines for profit growth. The acquisition of Allied Domecq brands increased the group’s leadership position in Asia and doubled its size in the US. Europe and France were not as profitable and generated only organic sales growth of 0.8% and 1.1% respectively.

Overall, net group profits amounted to o639m, up 32.1% on last year.

Danone backs aqua d’or in Scandinavia

Groupe Danone has acquired a 49% stake in the Danish bottled-water company Aqua d’Or as part of its strategy to build a strong market position in Scandinavia.

Since it was launched in 2002, the mineral water has become the number-one brand in the Danish still bottle-water market. Last year, Aqua d’Or reported sales of around o20 million and saw its value grow by over 50% in its home market. The Danish water brand is also big in Sweden, where it occupies second place in the market. Following completion of the deal, the current management team will continue to run the business.

Groupe Danone, which posted beverage sales of over o3.4 billion last year, sees huge potential in the Scandinavian bottled water market, where annual per capita consumption averages 22 litres, compared with 110 litres in western Europe.

Chairman and CEO of Groupe Danone, Franck Riboud says, “This partnership with Aqua d’Or, the local fastest-growing bottled water company, will allow Groupe Danone to benefit from its knowledge of the market as well as the distribution channels in the Nordic region. The Aqua d’Or portfolio and the Evian product range are also very complementary.”

Allan Feldt, chairman and founder of Aqua d’Or, says the Danish brand will make Evian the number-one imported water in the Scandinavian market. 

KWV sells cavendish to thierry’s

South African wine company KWV International has agreed to sell its subsidiary, Edward Cavendish & Sons, to Thierry’s Wine Services. As part of the deal, KWV will take a substantial minority stake in the UK wine agency.

The agreement comes only a few months after KWV began looking for a potential buyer for its subsidiary. The transaction was driven by the need for both companies to be able to compete in the fierce UK market by offering a wider portfolio of products at different price points and quality levels than either company could on its own.

Peter Darbyshire, managing director of Thierry’s, says, “Linking up with Edward Cavendish and KVW, South Africa’s best-known and longest-established wine company, allows us to add greater depth to our existing South African portfolio of estate wines from Ken Forrester, Diemersfontein, Danie de Wet and Excelsior.”

No further financial details have been disclosed.

Magners shares soar

Irish cider brand to double its capacity to meet demand

This month’s share index reflects the bullish mood of the City with over half (55.16%) of companies in the index recording double-digit growth in the past quarter.

Magners is still the headline story. C&C Group saw its share price rise by a mammoth 62.58% after announcing its intention to double its cider production capacity in order to meet growing demand for Magners, sales of which are up 250%.

Meanwhile, FEMSA demonstrated that there are still plenty of opportunities in the Mexican beer market – investor confidence saw its share price rise by nearly 30% after delivering solid growth last quarter.

Low levels of beer consumption per capita and growing disposable income have made the Latin American continent very attractive to investors. Both Ambev and Inbev recorded double-digit growth, largely on the back of sales in Latin America. Ambev, which dominates the beer market in Argentina, Brazil, Uruguay, Paraguay and Bolivia, saw its second-quarter profits rise year on year, driven by rising sales in Brazil. InBev’s price also rose by nearly 20% despite admissions of an unsatisfactory performance in China. Its global beer sales rose by 5.7% thanks to growth in Latin Amrica and central and eastern Europe.

The market was slightly harder on spirits giant Diageo following news that it would not increase this year’s profit forecast.

© db October 2006