Pernod Ricard SA (RI), France’s biggest distiller, reported third-quarter sales that beat analysts’ estimates after consumers continued to buy more expensive spirits and demand increased in emerging markets.
Organic revenue, which excludes the effect of acquisitions, disposals and currency fluctuations, rose 3 percent in the three months through March 31, the company said today in a statement. The median estimate of 11 analysts was for a 0.4 percent increase in sales. Revenue on the same basis rose 9 percent in the first nine months.
Pernod had “strong momentum in emerging markets, which continued to grow double-digit, and modest growth in developed markets,” Martin Deboo and Gideon Adler, analysts at Investec Plc in London, wrote today. A deferred impact of distributor restocking in France also affected earnings, said the analysts, who have a buy recommendation on the shares.
Distributors pre-bought alcohol in France in advance of a tax increase on Jan. 1. The company absorbed about half the impact of the destocking in the quarter, with the rest to come in the fiscal fourth quarter, Chief Financial Officer Gilles Bogaert said in an interview.
Pernod’s shares rose as much as 2.1 percent to 81.50 euros in Paris and were up 0.8 percent at 9:41 a.m., extending the gain this year to 12 percent.
“Buoyant” growth of Pernod’s main brands, including Martell cognac, and increased “relative significance” of premium spirits helped boost sales in the third quarter, the Paris-based company said. Total revenue rose to 1.7 billion euros ($2.3 billion). Excluding effects of the French tax increase and an earlier Chinese New Year, third-quarter organic growth would have been 8 percent.
Pernod, which sells spirits including Absolut vodka and Chivas Regal whisky, is among companies tapping sales growth in emerging economies including China and India to offset tough markets in the U.S. and Europe. Nine-month sales rose 17 percent in emerging markets including China and India compared with a 3 percent advance in mature markets.
“The underlying trends in the first half did not change a lot in the third quarter,” Bogaert said in the interview. The company “still sees some underlying trends which are slightly declining” in western Europe, as tough economic conditions restrain sales.
Pernod raised its annual earnings forecast in February, saying it expects organic operating profit growth close to 8 percent. Profit on that basis increased 17 percent in the first half after drinkers in Asia bought more Martell cognac to celebrate the Chinese New Year, which fell 11 days earlier than in 2011. That brought some purchases for the festival into the second quarter from the third.
Pernod maintained its forecast today, and Bogaert said the third quarter was “in line with what we expected.” He declined to comment further on profitability.
Rival Remy Cointreau SA (RCO) reported sales for the quarter through March 31 that slid 8.3 percent due to the earlier timing of the Chinese festival.
Pernod said yesterday that it signed a new 2.5 billion-euro revolving credit facility with a group of 25 banks to refinance debt from its 2008 acquisition of Vin & Sprit AB, the Swedish maker of Absolut vodka. The company said today that it has completed its debt refinancing.
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