Emerging markets provide sparkle for whisky producer

● Chivas owner Pernod Ricard forecasts further robust growth in year ahead

Pernod Ricard, the French spirits giant that is one of Scotland’s biggest whisky producers with brands including Ballantine’s and Chivas Regal, has cheered strong full-year results as it cashed in on soaring demand in China and India.

The group – the world’s second-biggest spirits company behind Uk-headquartered Diageo – also gave a robust outlook for the current financial year as it revealed that sales had topped almost €9 billion (£8.2bn) in the 12 months to the end of June.

Pernod, whose brands also include Absolut vodka and Jameson Irish whiskey as well as the aniseed liqueur from which it draws its name, pointed to broad-based growth coming from a wide spectrum of markets.

In the Americas there was sales growth of 6 per cent, with the US now growing “broadly in line with market” and accelvery eration in Mexico and Brazil. The “Asia-rest of World” region notched up a 9 per cent hike in sales, year-on-year, thanks to a return to strong growth in China and India.

Chairman and chief executive Alexandre Ricard said that the key drivers in India and China were the emerging middle classes.

The group reported more muted growth of 2 per cent in its home market of Europe, with good momentum in Eastern Europe, Germany and the UK but “difficulties” in France and Spain.

Pernod’s “strategic international brands” saw growth accelerate to 7 per cent from 4 per cent in the prior financial year, with 11 of the 13 brands in growth territory. It highlighted a “very strong” performance for Martell cognac and Jameson whiskey – both up by 14 per cent.

An improving trend was reported for the overall Scotch portfolio (+3 per cent versus stable the previous year) and return to growth for Chivas (up 5 per cent).

Ricard added: “2018 was a strong year. Consistent strategic implementation has enabled us to deliver a significant improvement in business performance while investing for the future.

“Our sales have accelerated and diversified, and our margins improved. In [financial year 2019], in a still uncertain geopolitical and monetary environment, we will continue consistently implementing our strategy.

“Our guidance for FY19 is organic growth in profit from recurring operations of between 5 per cent and 7 per cent.”

Profits for the period under review came in at just under €2.36bn, an increase of 6.3 per cent and in line with an average forecast in a poll for Thomson Reuters.

Analysts at Jefferies noted the profit projection for 2019 was slightly weaker than had been expected. “Despite the robust results, we expect a muted share reaction,” they said in a note, keeping a “hold” recommendationonthestock.

Chairman Ricard said the group remained focused on undertaking smaller bolt-on acquisition deals.