DRINKS giant Pernod Ricard has underlined “improving trends” for its Scotch whisky portfolio, including a return to growth for its Chivas brand, as it reported an organic profit rise of more than six per cent to €2.4 billion - in line with revised guidance.
Paris-listed Pernod, which is in the process of shifting its Chivas Brothers bottling operation from Paisley to Dumbarton, said its whisky division grew sales by three per cent, having been “stable” the year before.
The company has previously said all 450 staff employed in Paisley would be guaranteed a job at the Kilmalid site in Dumbarton, but gave no update on how many have so far transferred between the sites yesterday.
A spokeswoman said: “Our £50 million investment in Kilmalid reached its first major milestone in May where we held a historic breaking the ground event to mark the start of construction of the new state-of-the-art bottling facility. Construction work is continuing at the site and we have started to transfer some activities, with the site due for completion towards the end of 2019.”
The rise in profits at the group came amid what chief executive Alexandre Ricard said was a year of growth from a broad geographical and brand perspective.
But he warned it continues to face an “uncertain geopolitical and monetary environment”, with the firm guiding on profits growth of between five and seven per cent in the current year.
Commenting on Brexit during a presentation to analysts, he said Pernod has “limited visibility and guidance” on the trading conditions it will bring.
“We will obviously be happy to know what they are so we can adapt,” he said.
Pernod grew sales by six per cent to nearly €9 billion in the year ended June 30. It reported growth of 9% in Asia-Rest of World – driven by the return to strong growth in its “two big heavyweight emerging markets” of China and India.
Pernod also highlighted “continued dynamism” in the Americas. Sales in the region increased by 6%, compared with 7% last year, which came as the US market it grew in line with the broader market at 4%. Growth accelerated in Mexico and Brazil.
The distiller reported “modest growth” of two per cent in Europe, flagging “good momentum” in the UK, Germany and eastern Europe, offset by difficulties in France and Spain.
In a presentation to the media and investors, Mr Ricard highlighted the performance of the company’s flagship Scotch whiskies as its strategic international brands reported growth of 7%, up from 4% the year previously.
“Eleven out of the 13 [strategic international brands] are growing and six are improving their trends,” Mr Ricard said. “[There was a] very strong performance of Martell and Jameson, growing 14%, improving trends for our Scotch portfolio, [with] the entire portfolio growing 3% and our strategic international Scotch brands growing 5%.
He noted Chivas had grown 5%, with Ballantine’s and The Glenlivet having increased sales at the same rate. The Glenlivet grew strongly in Asia and Eastern Europe and benefited from improving trends in Western Europe, while Ballantine’s was boosted in Asia, Eastern Europe and Africa Middle East.
Mr Ricard highlighted the resurgence of the Pernod business in China, where until recent months luxury spirits makers have struggled in light of austerity measures introduced by the government in 2012.
Pernod said it had seen a “significant acceleration” in the market last year, with sales rising by 17% compared with two per cent last time.
Within that, Mr Ricard highlighted the “return to growth of Chivas” in China, following the first full-year of its sponsorship deal with basketball body the NBA. Basketball is a closely watched sport in China. The Chivas brand benefited from an increase in marketing investment and the launch of a Chivas Regal 12.
Elsewhere, Mr Ricard pointed to rapid growth in India, with sales rising 14% versus 1% last time. However, he said the comparisons were favourable with the previous year amid demonetisation and the introduction of a highway ban on alcohol sales.
While conditions improved in China and India. sales fell 4% in France against a backdrop of tough price competition. Sales dipped 5% in Spain amid a slowdown in the market, with Mr Ricard also citing the “situation in Catalonia”.
Pernod said sales grew by six per cent in the UK, driven mainly by Absolut, Jameson and Beefeater.
The company proposed to increase its dividend by 17% to £2.36 for the year.
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