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    RI   FR0000120693

PERNOD RICARD

(RI)
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Pernod Ricard : expects sales growth to moderate after strong Q1

10/21/2021 | 01:59am EST
FILE PHOTO: Bottles of the Ricard aniseed-flavoured alcoholic drink

* Q1 sales 2.72 bln euros, up 20% like-for-like vs 15.7% forecast

* China sales up 22%, U.S. sales up 9%, Europe sales up 22%

* Expects good sales growth through year though moderating vs Q1

PARIS, Oct 21 (Reuters) - French spirits maker Pernod Ricard said solid sales growth could moderate in the 2022 fiscal year, after strong demand in China, the United States, India and Europe helped it post above-forecast sales in the first quarter.

Pernod - which owns Martell cognac, Mumm champagne and Absolut vodka - reported a 20% rise in like-for-like sales to 2.718 billion euros ($3.17 billion) in the three months to Sept. 30, above market expectations for a 15.7% rise.

The world's second-biggest spirits group said consumption by people staying at home remained resilient, while the reopening of bars and restaurants as coronavirus restrictions eased also helped, notably in Europe.

Travel retail was still subdued although the company benefited in the quarter from a low comparison base.

Pernod Ricard's fiscal year started on July 1.

When asked if he was comfortable with average analyst expectations of 9.7% sales growth for the full year, Chairman and Chief Executive Officer Alexandre Ricard told Reuters "we give a qualitative guidance".

"We are confident but we need to go through Christmas and the Chinese New Year (to have more visibility)," he said.

Pernod expected "good sales growth to continue through the year", he said, adding that the first quarter had benefited from a low comparison base a year ago, when pandemic curbs had hit businesses in many countries.

That comparison base would progressively become less favourable as the year progressed, Ricard added.

"The comparison basis will get more complicated, the longer we go on."

Despite strong sales, Pernod shares were off 1.1% at 196.60 euros by 0819 GMT.

"There is no change to the outlook, and although the beat is significant, it is only one quarter so we think consensus upgrades will probably be minor at this stage," wrote Investec analysts in a note.

Credit Suisse analysts pointed out that "significant investment in Advertising and Promotion(A&P) and structure costs should temper margin expectations," for the year.

GOOD MID-AUTUMN FESTIVAL IN CHINA

The strong start to the year reflected a 9% sales jump in the United States, Pernod Ricard's top market, with good replenishment ahead of the festive season and a rebound in demand for Jameson Irish whiskey as bars and restaurants reopened after COVID restrictions were eased.

Supply chain concerns ranging from difficulties to find containers or truck drivers led some clients in the United States to stock up ahead of the holiday season, Ricard said.

In China, sales jumped 22%, driven by demand during the Mid-Autumn Festival and Martell cognac price hikes.

"The Mid-Autumn Festival went well and our inventory level is healthy," Ricard said.

Europe also had a strong start, with sales rising 22% as consumers headed to bars and restaurants amid easing COVID restrictions.

"People are keen to connect socially and resume (pre-COVID) lifestyles," Pernod's finance chief Helene de Tissot told analysts.

China contributes around 9% to Pernod's sales and is its second-largest market.

Global travel retail sales rose 55% year-on-year, returning to growth in all regions and benefiting from a very favourable comparison base.

($1 = 0.8583 euros) (Reporting by Dominique Vidalon; additional reporting by Laetitia Volga in Paris, Editing by Subhranshu Sahu, Christopher Cushing and Ana Nicolaci da Costa)


© Reuters 2021
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Financials
Sales 2022 9 970 M 11 290 M 11 290 M
Net income 2022 1 833 M 2 075 M 2 075 M
Net Debt 2022 7 182 M 8 133 M 8 133 M
P/E ratio 2022 29,0x
Yield 2022 1,75%
Capitalization 53 200 M 60 249 M 60 243 M
EV / Sales 2022 6,06x
EV / Sales 2023 5,64x
Nbr of Employees 18 306
Free-Float 75,1%
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Mean consensus OUTPERFORM
Number of Analysts 26
Last Close Price 203,90 €
Average target price 209,84 €
Spread / Average Target 2,91%
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Managers and Directors
Alexandre Ricard Chairman & Chief Executive Officer
Hélène de Tissot Director-Finance & Operations
Frèdèric Andrè Director-Information Technology Governance
Anne-Marie Poliquin General Counsel & Compliance Officer
Wolfgang Colberg Independent Director
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