The French group, the world’s number two in wines and spirits, reported better-than-expected results for its 2022/23 financial year on Thursday. Confident in its future performance, Pernod Ricard also announced several structural changes to reinforce the Group’s strategy.
Pernod Ricard, the world’s second-largest spirits group, announced results on Thursday that exceeded expectations for its 2022/23 financial year ended June 30. It expects a more modest start to the year, with lower sales in America and China.
Sales for the French wine and spirits group came to 12.14 billion euros, recording organic growth of 10%. This performance was driven by advances in all regions. Experts had forecast organic sales growth of 9.3%, in line with a consensus drawn up by Pernod Ricard and shared by JPMorgan.
The company’s operating profit from ordinary activities reached 3.348 billion euros ($3.66 billion), marking an organic increase of 11%. This exceeded analysts’ expectations of a 9.6% increase, as well as the company’s initial forecast of around 10%.
In Asia and the rest of the world, sales growth reached 17%, boosted by a solid performance in India, a recovery in Travel Retail sales, as well as increases in China and Turkey. In the Americas, growth was 2%, while in Europe it was 8%.
Thanks to recurring free cash flow of 1.653 billion euros, the Group is proposing a 14% increase in the dividend to shareholders, bringing it to 4.70 euros per share.
Forecasts and share buy-backs
The owner of the Martell cognac, Mumm champagne and Absolut vodka brands has reaffirmed its medium-term forecasts, targeting sales growth at the upper end of a range from +4% to +7%.
However, the Group expects a decline in performance in China due to ongoing macro-economic challenges. In the Americas, the Group reports difficult comparisons with the previous year, although the overall outlook for the year remains positive. These expectations led to a decline in Pernod Ricard’s share price, down 3.89% to 186.75 euros at 08:21 GMT.
“Although the environment remains challenging for the 2023/24 financial year, I remain confident in Pernod Ricard’s ability to achieve its medium-term objectives,” commented Chairman and CEO Alexandre Ricard.
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In addition, the Group unveiled a share buyback plan for the 2023/24 financial year, for between 500 and 800 million euros. This program is in line with expectations, write Credit Suisse analysts in a note.
Structural change
On Wednesday, Pernod Ricard also announced a number of changes to its corporate structure. These “are intended to reinforce its consumer-centric strategy, support its new phase of growth and thus continue its transformation begun in 2015,” the group said in a statement.
An Executive Committee will take over from the current Executive Board. With nine members, this committee now includes the new executive vice presidents in charge of brands and markets, as well as the CEO of Pernod Ricard North America and the COO.
For his part, Philippe Guettat, current CEO of Pernod Ricard Asia, becomes Executive Vice-President in charge of Brands. Gilles Bogaert, currently CEO of Pernod Ricard EMEA/LATAM, takes on the role of Executive Vice President, Markets.
The regional divisions encompassing both EMEA/LATAM and Asia are abolished “to ensure rapid decision-making and execution at all levels of the organization. All markets are now grouped into 10 ‘management entities’, to promote critical mass and pooling of resources”, explains the Group.
Lastly, a new 30-member Executive Leadership Team has been created.
“It brings together the heads of the company’s key functions, as well as the members of the Executive Committee. The ELT ensures the coherence and deployment of the Group’s growth strategy and the resources associated with it”, detailed Pernod Ricard.
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Featured photo : ©Pernod Ricard
