Pernod Ricard full-year net profit up 12.5 percent to $1.35 billion Absolut buy

Pernod Ricard net profit up 12.5 percent for year

PARIS — Pernod Ricard SA’s net profit rose 12.5 percent last year after the French wine and spirits group acquired the maker of Swedish vodka Absolut, the company said Thursday.

The Paris-based company, known for its anise-flavored aperitifs as well as Beefeater gin and Chivas Regal cognac, said net profit in the 12 months ended June 30 was euro945 million ($1.35 billion), up from euro840 million a year earlier.

The performance was in line with the company’s guidance for full-year earnings growth, a target the company had lowered earlier in the year as the global economic crisis hit sales of most of Pernod Ricard’s leading brands, such as Ballantine’s whisky and Perrier Jouet champagne.

Pernod Ricard said its net profit from recurring operations, an indicator watched closely by analysts, grew 13 percent to euro1.01 billion, in line with the company’s target of over 10 percent growth.

Organic growth in profit from recurring operations, which strips out the gains from Pernod Ricard’s acquisition last year of Swedish distiller Vin & Spirits, rose 4 percent, within the company’s forecast of growth between 3 and 5 percent.

Sales rose 9 percent to euro7.2 billion, in line with Pernod Ricard’s prediction last month, when it warned that sales growth had slowed in the last half of the year compared with the first six months as consumers drink less and wholesalers and distributors reduced inventories.

Pernod Ricard bought Sweden’s Vin & Spirit, the maker of Absolut vodka, for euro5.3 billion in debt last year. That deal added euro915 million to the group’s overall sales last year and euro272 million in profit from recurring operations.

In a statement, the company said it expects the economic environment to remain difficult this year, and for the wine and spirits market to stagnate. It warned that its first-half results this year would suffer from an unfavorable comparison with the very strong results booked in the first half of last year, but that the effect would be reversed in the second half.

Pernod Ricard shares fell 31 percent in the year to June 30, in line with Paris’ blue chip CAC 40 index, which fell 29 percent over the period. Since then the stock has rebounded 19 percent, as equities have benefited from investors’ betting on an end to the global recession.

Sales of what Pernod Ricard calls its 14 strategic brands fell 4 percent by volume and stagnated in value terms. Among the worst hit of its brands was champagne house Perrier Jouet, whose sales fell 13 percent by volume last year. Pernod Ricard blamed the decline on the “especially difficult” U.S. market.

Among the brands that resisted the crisis was Pernod Ricard’s Havana Club Cuban rum, whose sales rose 5 percent by volume last year to 3.4 million 9-liter cases. The Glenlivet Scottish whisky and Jameson Irish whiskey also managed to increase sales last year despite the economic gloom.

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