Pernod Ricard SA raised its forecast for full-year earnings after demand for premium cognac in China helped the distiller beat analysts' estimates for sales.
Profit from recurring operations will rise by about 3 per cent this year, more than a previous forecast of 1 per cent to 3 per cent, Paris-based Pernod said today in a statement.
Revenue excluding duties and taxes rose to €1.54 billion in the three months through March from €1.35 billion a year earlier, beating the median estimate of €1.43 billion from 10 analysts surveyed by Bloomberg.
"This is an extremely strong number and reinforces the view that Pernod's continued focus on its premium brands through the economic slowdown is delivering," said Simon Hales, an analyst at Evolution Securities in London who has an "add" rating on the shares. "Consensus upgrades are likely."
Organic sales, which exclude acquisitions, rose 16 per cent in the fiscal third quarter, the first gain in a year, as consumer confidence improved in the US and demand for premium spirits increased in Asia. That surpassed the 11 per cent pace predicted by analysts.
Pernod's sales in Asia and the rest of the world rose 10 per cent, while revenue in the Americas climbed 3 per cent.
"We continue to think investors underestimate how geared Pernod is to a worldwide economic recovery," Erwan Rambourg, an analyst at HSBC in London, said in a note to investors. "Consumers are likely to trade more, notably in bars and restaurants, if the economy recovers."
Pernod, which makes Absolut vodka and Chivas Regal whiskey, has advanced 5.1 per cent this year in Paris trading, more than larger rival Diageo Plc's 1.9 per cent gain in London. The French company's stock declined 3.3 per cent yesterday to €62.99.
The distiller's organic sales in the prior-year period slumped 12 per cent as distributors in the US and Europe reduced inventories. But a slowdown in business at bars and restaurants in the US is on the way to stabilising, the company said, helping premium brands outperform the overall market in this year's third quarter.
Sales in Asia were boosted by the early timing of Chinese New Year, growth of 29 per cent in India and the recovery of duty free, the company said. Organic sales of the Martell cognac brand climbed 16 per cent, more than any of Pernod's top 15 brands, on the boost in Chinese demand.
European sales unexpectedly decreased due to the "difficult" situation in Spain, the UK, and Ireland, while there was a rebound for premium international brands in Russia, the company said. Organic sales in France rose 1 per cent.
Bloomberg