Pernod Ricard makes a good start to the first quarter after beating forecasts

Pernod Ricard on Thursday posted annual results that beat forecasts, helped by price increases as the French spirits group benefited from drinkers like rival Diageo (LON:DGE) turning to more expensive spirits.

The owner of Mumm champagne, Absolut vodka and Martell cognac said sales growth would remain "dynamic" and "broad-based" with a good start to the first quarter, which began in July, despite the environment remaining volatile due to high inflation, the war in Ukraine and COVID lockdowns in China. Pernod Ricard (EPA:PERP) shares traded down 0.5% at 182.60 euros. Brokerage firm Jefferies said in a note that the message for the first quarter was reassuring, but that there were no specific profit expectations for fiscal 2023. "The summer months were good in all markets," Chairman and CEO Alexandre Ricard told Reuters by phone, adding that he was confident Pernod Ricard could deliver further price gains this fiscal year. In China, where sales slowed in the fourth quarter due to COVID restrictions from March, trends have clearly improved since restrictions were eased in June, he said. With record free cash flow of 1.926 billion euros ($1.93 billion), the world's second-largest spirits group said it was offering shareholders a dividend of 4.12 euros per share, a 32% increase, and a new share buyback plan worth 500 million to 750 million euros for fiscal 2022/23. In the 12 months to June 30, the firm's profit from recurring operations rose 19% organically to 3.024 billion euros, above analysts' estimates for an 18.1% increase. Sales rose 17% organically to €10.701 billion, with sales up 8% in the key market of the US, 5% in China and 26% in India. Pernod said it gained market share in most markets and prices increased by single digits on average in all markets, offsetting the impact of cost inflation. Sales were boosted by resilient consumption among people staying at home, the reopening of bars and restaurants and a rapid recovery in travel-related retail, it said. Profit in the global travel retail business was expected to return to pre-COVID levels in fiscal 2022/23. Chief Financial Officer Helene de Tissot told analysts that in the face of high inflation, the group's aim was to protect gross margin this year through further price increases and operational efficiencies. The group also said it was confident of achieving its medium-term target over the fiscal years from 2023 to 2025. Pernod said it will target annual organic sales growth at the upper end of the 4-7% range in the medium term. It also aims to increase its operating margin by 50-60 basis points per year if it can achieve annual organic sales growth in the 4-7% range. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!