UPDATE: French Spirits Groups' Revenue Boosted By Asia
October 21 2010 - 3:12AM
Dow Jones News
PARIS (Dow Jones) -- French spirits groups Pernod Ricard SA
(RI.FR) and Remy Cointreau SA (RCO.FR) both beat expectations
Thursday with substantial quarterly revenue increases, as sales
were boosted by strong growth in Asia and performance was lifted by
the strong U.S. dollar against the euro.
"Both Pernod Ricard and Remy Cointreau have reported big sales
beats," Evolution Securities' analyst Simon Hales said.
Both groups cited strong sales in Asia, notably China, and a
positive impact from foreign exchange rates, while they also both
noted improving sales in the U.S.
Pernod posted a better-than-expected 14% rise in revenue for the
first quarter ended Sept. 30, to EUR1.88 billion from EUR1.65
billion a year earlier. This was mostly due to 25% growth in sales
in Asia Pacific and the Middle East as well as a 7% positive impact
from foreign exchange, Pernod Ricard noted.
The group said it now expects full-year profit from recurring
operations to increase close to 6% on an organic basis and its net
debt to earnings before interest, taxes, depreciation and
amortization ratio to be close to 4 by the end of June 2012. The
company is expected to detail its full-year guidance at a
shareholder meeting on Nov. 10.
The organic growth rate accelerated to 10% for the quarter,
compared with a decline of 4% a year earlier, Pernod also said.
But analysts expect organic growth to slow in coming quarters,
as comparables become tougher.
Still, Pernod's Chief Financial Officer Gilles Bogeart told Dow
Jones Newswires that business in October has continued the dynamic
trend set in the first quarter.
"The very good performance of the first quarter, which was
driven by the top 14 (brands) and supported by our marketing
investment, confirms our confidence in the current financial year,"
Pernod Ricard's Chief Executive Pierre Pringuet said in a
statement.
Remy Cointreau posted a slightly better than expected 15%
increase in revenue for the second quarter to EUR257.2 million, up
from EUR223.6 million a year earlier.
In the fiscal first half, Remy's revenue grew 18.3% to EUR428.2
million from EUR361.9 million a year earlier.
Remy didn't disclose full-year guidance but said that its
financial position enabled it to comply with its banking covenant
at the end of September.
"In an economic environment which, whilst improving, remains
uncertain, Remy Cointreau maintains its long-term value strategy.
The group will continue to benefit from the efficiency of its new
distribution network and will support its brands by increasing its
marketing investment in priority markets," Remy also said.
"Although Pernod's first quarter sales growth rate is double
that reported by Diageo Plc (DEO) last week, the market should be
reassured that the wider industry is confirming firmer trading
trends in its key U.S. market - Remy noted that they have seen
'significant recovery in superior qualities' - and that Western
Europe markets are holding up relatively well," Evolution's Hales
noted.
Shortly after the market open, shares in Pernod Ricard were
trading up EUR2.69 or 4.3% to EUR64.20 while shares in Remy
Cointreau were down 2.3% to EUR49.52.
Company Web site: www.pernod-ricard.com
- By Geraldine Amiel and Amelie Baubeau, Dow Jones Newswires;
+33 1 40171740; geraldine.amiel@dowjones.com,
amelie.baubeau@dowjones.com;