Pernod Ricard has said that it expects 10% organic profit growth in fiscal year 2020/21 after strong demand in its key US and Chinese markets helped the French spirits group to beat third quarter sales forecasts.
The owner of Mumm champagne, Absolut vodka and Martell cognac expects sales to accelerate in the fourth quarter as bars and restaurants gradually reopen, though travel retail is expected to remain subdued due to limited passenger traffic.
"Management guidance for 10% organic EBIT growth in FY21E is significantly better than the market expected and compares to current consensus of 7.1%," Citi analysts wrote in a note.
Pernod Ricard's fiscal year starts on July 1.
Statistics
Pernod, which is the world's second biggest spirits group after Diageo, recorded sales of €1.955 billion for the three month period that ended on March 31 - up 19.1% on a like-for-like basis, and beating analysts' expectations of 11.3% growth.
That performance marked a return to sales growth after the previous two quarters showed a decline.
Sales for the first nine months reached €6.941 billion, an organic growth of 1.7%.
US
Sales in the US continued to grow at a mid-single digit pace, as stuck-at-home consumers splurged on Glenlivet scotch and American whiskeys while a cocktail craze boosted demand for Malibu rum and Kahlua liquors and tequila.
US sales of Jameson Irish Whiskey were softer in the third quarter, but this compared to strong year-ago sales due to COVID-related pantry loading and the launch of Jameson Cold Brew. Pernod Ricard finance chief Hélène de Tissot told Reuters by phone that Jameson's underlying sales trend remained "unchanged".
China And India
In China, Pernod Ricard recorded triple digit growth during the third quarter, boosted by an "excellent" performance during the Chinese New Year festivities, with very strong demand for Martell cognac. This meant that the group was able to raise cognac prices by 3% to 4% in April in China, de Tissot said.
In India, which is Pernod's other key market after the US and China, all key brands showed double digit sales growth in the third quarter, but a resurgence of COVID-19 cases in March and April was leading to new restrictions.
Easier Comparisons
The group's performance was flattered somewhat by easier comparisons with last year, notably in China where COVID-19 restrictions that shut bars and clubs were largely implemented in March of 2020.
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