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Growth at Pernod Ricard hits 2% as whisky sales rise

The rebound in sales of Pernod Ricard’s key whisky brand Chivas Regal is accelerating but the group is struggling to return to profit growth.

The French drinks giant said sales of Chivas Regal whisky rose 5% in value terms in the 12 months to June 30.

For the first nine months Chivas posted sales growth of just 1% and it fell 2% over the course of the 2008/2009 financial year.

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Over the last year Chivas Regal sales increased 1% in volume terms as 4.2 million cases were shipped to customers.

However, the group’s other main whisky brand Ballantine’s continues to struggle. It posted a 4% fall in sales over the last year as the number of cases sold fell from 6.1 million to 5.9 million.

The Glenlivet, Pernod Ricard’s flagship single malt whisky brand, continued to post growth as it has throughout the economic downturn, growing 7% in the year.

Pernod Ricard’s net profit from recurring operations was down 1% at €1bn (£833m). Pernod said stripping out currency movements would translate this into a 7% increase.

Net sales were down 2% overall at €7.1bn with France, the rest of Europe and the Americas all posting falls. Only the company’s Asia/rest of the world region was positive.

The group said that organic growth has been 2%, but currency movements and the sale of several brands, including Wild Turkey and Tia Maria, weighed on the numbers.

Pernod has been trying to pay down debt but this too has been hampered by the weak euro.

Net debt was €10.6bn, having fallen €304m aided by divestments of €200m.

Analyst Rob Mann of Collins Stewart wrote in a note to clients: “We fear that Pernod is set to be stuck in a debt-driven purgatory for the coming months.”

Worries also remain about the strength of the US spirits market.

However, there are signs that Pernod is increasingly confident about the future with advertising spending ticking up 2% to €1.3bn.

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