China and India driving Pernod sales growth

Strong sales in India and China have led drinks giant Pernod Ricard to forecast underlying profit growth from recurring operations of between 5-7% for the full year ending 30 June 2019.

The world’s second largest alcoholic drinks company forecast continued growth in the coming year in spite of an uncertain financial climate.

Based on current estimates, Pernod Ricard doesn’t foresee a significant impact from currency movement on sales and profit in the fiscal year ahead.

“The 2018 financial year was very strong. Consistent strategic implementation has enabled us to deliver a significant improvement in business performance while investing for the future. Our sales have accelerated and diversified, and our margins improved,” said Pernod Ricard’s CEO, Alexandre Ricard.

Pernod Ricard’s CEO, Alexandre Ricard, forecasts future profit growth

“In the 2019 financial year, in a still uncertain geopolitical and monetary environment, we will continue consistently implementing our strategy,” he added.

Pernod’s sales for the 2018 financial year totalled €8,987 million. However, shares in the company fell by 2.1% as European markets opened this morning.

The Paris-based company said organic sales growth rose from 3.6% to 6% in the full year 2017/18 off the back of a 17% rise in sales in China, a 14% rise in India and a 4% rise in the US – its top market, leading to a €2.3 billion profit.

Sales growth in Europe was at a modest 2%, with good momentum in Eastern Europe, Germany and the UK but strained performances in France and Spain.

Among the top performing brands overall was Martell Cognac and Jameson whisky, both of which are enjoying 14% year-on-year growth.

Ricard said that an expanding middle class in both India and China was helping to drive sales growth for the company.

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

“We’ve been actively managing our portfolio of brands through merger and acquisition activity, with partnerships or acquisitions,” he added.

He also forecast a “very strong” first quarter next year and a boost during July to September from a mid-autumn festival in China.

Pernod Ricard owns an array of brands, including Martel Cognac, Absolut vodka, Beefeater gin, Chivas whisky, and Perrier-Jouët Champagne.