Pernod Ricard Reports First Half Revenue of 5,061 Million Euros

The Tip Desk · December 31, 2016 · 2 min read

The spirits maker is simplifying its brand portfolio to focus on priority wines and spirits.

Pernod Ricard, the spirits and wine maker, reported consolidated revenue of 5,061 million euros for the first half of the 2016/17 fiscal year, compared to 4,958 million euros in the same period the previous year. The company said it is simplifying its portfolio to support growth and concentrate on priority brands. This strategy included the sale of Frïs vodka to Sazerac on September 30, 2016, and an agreement on December 1, 2016, to sell Domecq brandies and wines.

Revenue growth for International Strategic Brands accelerated to 6% on a constant exchange rate and perimeter basis, driven by Jameson, Ballantine’s, Martell, and a return to growth for Absolut. Jameson grew 20% and now generates more than one quarter of the company's revenue in the United States. Ballantine’s rose 6%, while Martell grew 7% with a 10% return to growth in China. Absolut returned to growth at 1%, though it remains in decline in the United States,.

Regional performance was led by the Americas, where growth rose to 7% from 4% in the first half of 2015/16. Europe grew 3%, supported by a recovery in Russia and performance in Spain and the United Kingdom. Asia and the Rest of the World grew 3%, a deceleration from 5% in the prior year. The company attributed the slowdown in Asia to a double-digit decline in Korea and a temporary impact in India caused by demonetization,.

Operating results showed a current operating income of 1,500 million euros, a 4% increase on a constant basis. The operating margin rose 4 basis points to 29.6%,. Gross margin after logistics costs reached 3,158 million euros. The company said the operating margin improved due to premiumization, strict resource control, and currency effects.

Net current profit attributable to the Group rose 5% to 957 million euros. Free cash flow improved to 658 million euros, an increase of 34%. Net debt rose by 237 million euros to 8,953 million euros as of December 31, 2016,. The company attributed this increase partly to a negative currency effect on dollar-denominated debt.

For the full 2016/17 fiscal year, the company confirms its internal growth target for current operating income between 2% and 4%. It anticipates a positive currency impact on current operating income of approximately 80 million euros. The company expects continued performance in the United States and for Jameson globally, alongside an improvement in sales trends for Chivas, Absolut, and in China.