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Pernod Ricard full-year profit increased thanks to U.S.

Staff Writer |
Pernod Ricard said that continued growth in the U.S., better conditions in China and cost-cutting would help it to improve profitability next year.

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Pernod Ricard said profit for the year ending June 30 rose to EUR1.24 billion ($1.38 billion) from EUR861 million a year earlier and proposed lifting its dividend 4% to EUR1.88.

The company is targeting growth in profit from recurring operations--a measure that analysts and the company often use--of between 2% and 4% in fiscal 2017.

"In a contrasted environment, we expect to continue improving our business performance year-on-year," said, Pernod's Chairman and Chief Executive Alexandre Ricard.

The world's no. 2 drinks conglomerate after Diageo PLC said profit from recurring operations rose 2% during the year to EUR2.28 billion from EUR2.24 billion in fiscal 2015, in line with analysts' expectations.

Full-year revenue rose 1% as strong sales of Jameson whiskey and Perrier-Jouet champagne made up for declining sales of Absolut and Chivas Regal Scotch whisky.

Organic sales growth for Jameson was 16% while for Perrier-Jouët it was 9% for the year. Absolut declined 4% and Chivas Regal slipped 4%.

Revenue in the three months to June declined in all of the company's regions. Sales in its Americas region, dominated by the U.S. market, fell 9% in the quarter, while its Asia/Rest of World region dropped 10% and sales fell 2% in Pernod's home region of Europe.

Restated for technical adjustments in France and the U.S., sales rose 2%, in line with the full year performance, the company said.

China also remained weak. The country, which was formerly a major growth driver, saw sales drop 9% over the fiscal year. Sales in China have declined since a government anticorruption campaign took hold in 2013 and discouraged spending on luxuries such as expensive liquor.

"We're confident in our ability improve our performance in China," said Mr. Ricard in an interview, adding that the market "remains difficult."

In, the U.S., Mr. Ricard said he expects Pernod to post "continued strong growth," boosted by Jameson and a slower decline in sales at its flagship Absolut vodka brand which has fallen out of vogue in recent quarters. Pernod's sales in the U.S. rose 4% in fiscal 2016 on an organic basis, compared with flat sales the previous year.

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