Pernod Ricard reports 3% sales growth

Pernod Ricard in the half year 2015/16, has reported 3% organic sales growth to €4.958 million and organic growth in profit from recurring operations +3% to €1,438m.

The world’s second largest drinks company says the improvement has been driven by the US.

It summarises:

 •         Americas: acceleration of growth +4% vs. +2% in full year (FY) 14/15, notably driven by US (+3% in first half (H1) 15/16 vs. stable in FY 14/15.);

•         Asia-Rest of World: +5%, +4% adjusting for earlier Chinese New Year (CNY);

•         Double-digit growth in India, Africa/Middle East and Australia;

•         China: -2%, -8% adjusting for earlier CNY1, in continuity of trends observed in Q1;

•         Difficulties in Korea and travel retail Asia;

•         Europe: improvement +1% versus stable in FY 14/15, driven by Spain and UK, with encouraging growth in most markets. Decline in France and Russia, in part due to "technical impacts."

The results goes on to outline growth across its top 14 brands, Priority Premium Wines and Key Local Brands.

•         Strong performance of Jameson, Martell, The Glenlivet, Perrier-Jouët, Mumm and Indian whiskies;

•         Difficulties for Chivas (due to Asia and travel retail) and Absolut (but improving underlying trends in US)

•         Priority Premium Wines: growth acceleration.

Reported second quarter sales were up +6%, due to a stronger US dollar. Partly offset by emerging market currencies. Q2 Sales were €2,734m, +4% in organic growth.

The report notes: “Improving pricing: +1% Negative mix driven by geography (India growth vs. China decline) and sustained investment in A&P (advertising and promotions): +6%, partly due to phasing, to support key innovation projects (Elyx, Tequila Avión) and must-win markets (US)

Pernod Ricard chairman and CEO Alexandre Ricard said: “Our half year results are solid, delivering a continued improvement in Sales. Our strategy has remained consistent and is driving results, in particular in terms of innovation.

"For full year FY15/16, in a still contrasted macroeconomic environment, we plan to continue improving our business performance year-on-year vs. FY 14/15. We will continue to support priority markets, brands and innovations while focusing on operational excellence. We expect to deliver organic growth in Profit from Recurring Operations in line with the guidance of +1% to +3% 3,” said Ricard.

Ricard, has also announced organiational changes, effective from July 1.

         1. Simplification of the Americas region to concentrate on its core business: the US and Canada. The new entity will have a direct representative on the executive committee (COMEX), strengthening its focus on the US, the group’s largest market.

         2. Creation of two new ‘management entities’ aligned with the Pernod Ricard EMEA model:

·         With Mexico as lead market, together with Venezuela, Colombia and Pernod Ricard Andes (Chile, Peru);

·         With Brazil as lead market, together with Argentina and Uruguay. The two new management entities will report to Pernod Ricard EMEA and will leverage the region’s expertise on emerging markets.

         3. Creation of a position of CEO, Global Travel Retail, reporting directly to headquarters. This new position will reinforce coordination between the three travel retail regions (Europe, Americas and Asia) and the domestic travel retail teams, facilitate the rollout of best practices and improve the coherence of group initiatives in this priority distribution channel.

These operational changes will entail the following executive transfers:

·         Paul Duffy, currently chairman & CEO of the Absolut Company and a member of the COMEX, is appointed chairman & CEO of Pernod Ricard North America and CEO of Pernod Ricard USA. Philippe Dréano, the current chairman & CEO of Pernod Ricard Americas, is retiring after a career spanning 27 years with the group. Bryan Fry, currently managing director, Pernod Ricard USA, is appointed managing director, Pernod Ricard Pacific and will report to the chairman and CEO of Pernod Ricard Winemakers. He replaces Julien Hémard whose new appointment will be announced shortly.

·         Anna Malmhake, currently chairman & CEO of Irish Distillers and a member of the COMEX, is appointed chairman & CEO of The Absolut Company.

·         Jean-Christophe Coutures, currently chairman & CEO of Pernod Ricard Winemakers and a member of the COMEX, is appointed chairman & CEO of Irish Distillers.

·         Bruno Rain, currently managing director in charge of group Hhuman resources & corporate social responsibility and a member of the COMEX, is appointed chairman & CEO of Pernod Ricard Winemakers.

·         Cédric Ramat, currently VP human resources for Pernod Ricard Americas, is appointed Hhuman resources and corporate social responsibility director and will become a member of the COMEX.

·         Mohit Lal, currently managing director of Pernod Ricard Travel Retail Asia, is appointed chairman & CEO of Pernod Ricard Global Travel Retail in addition to holding his current position, and will become a member of the COMEX.

The two new management entities will be led by:

-         Noël Adrian, managing director of Pernod Ricard Mexico;

-         Thibault Cuny, managing director of Pernod Ricard Brazil.

Pernod commented that following these changes, the group’s executive committee will now include members of five nationalities.

Ricard said: “A company's success depends above all on the women and men who bring it to life. Our group’s strength comes from these talents of diverse origins and backgrounds and our principle of global mobility, as illustrated by these organszational changes. In this spirit, I would like to pay tribute to Philippe Dréano for his unfailing commitment to our group’s development over the last 30 years”.