Asian demand boosts spirits groups

FRENCH spirits groups Pernod Ricard and Remy Cointreau beat forecasts yesterday as strong Asian demand and a recovering US market lifted their quarterly sales while Pernod sounded a cautious note amid a fragile economic climate.

Pernod, the world’s second biggest spirits group behind Britain’s Diageo, said it was targeting a rise of close to 6% in underlying operating profits in the year to June 2012 as it expected slow growth in its mature markets.

Smaller cognac and liqueur peer Remy voiced confidence in its capacity to improve earnings but cited an “uncertain economic environment, particularly in Europe”.

Pernod chief executive Pierre Pringuet told Reuters in a phone interview that 6% was a “good” guidance, which was “in line with the 6% we gave at the start of last year”.

“We do not rule out exceeding it” he added, saying October trends were in line with those of the strong July-Sept first quarter. Pernod achieved 8% profit growth in 2010-11.

“The start of the 2011-12 financial year confirms the solidity of our markets,” Pringuet said.

“Our outlook assumes a macro-economic scenario featuring strong dynamism in emerging markets and slow growth in mature markets.”

Irish Distillers owner Pernod, and Remy’s updates, combined with forecast-beating first-quarter sales for Diageo on Wednesday and strong growth for the wines and spirits division of LVMH on Tuesday, helped cement the view that drinks makers have managed to escape most of the economic gloom.

Italy and Spain suffered from a difficult economic climate while France was a sore spot as sales fell 1% as cool summer weather hit Ricard sales.

Pringuet told Reuters that France was unlikely to decline in the second quarter.

He also reiterated that Pernod did not envisage any major acquisitions as it continues to cut debt it racked up when it bought the Absolut company Vin & Sprit in 2008.