Pernod Ricard SA on Aug. 29 reported an 8.7% year over year increase in profit from recurring operations for fiscal 2019, its best performance on that basis in seven years, and announced a share buyback of up to €1 billion over the next two years.
The French spirits-maker, which has come under pressure to improve its margins by activist shareholder Elliott Management, also said it was acquiring New York-based liquor company Castle Brands for $223 million. It further warned of a "particularly uncertain environment" for the year ahead and forecast organic growth in profit from recurring operations of between 5% and 7% for the 12 months ending June 30, 2020.
It was "an excellent year, which is a clear demonstration of business acceleration," said CEO Alexandre Ricard in a webcast with analysts. The results were driven by strong performance in China and India.
Organic profit from recurring operations rose 8.7% year over year to €2.58 billion, edging ahead of the S&P Global Market Intelligence consensus mean estimate for EBIT of €2.57 billion. Group share of net profit from recurring operations rose 9.5% to €1.65 billion from €1.51 billion.
Diluted net EPS rose 9.5% on a reported basis to €6.23 in fiscal 2019 from €5.69 reported in fiscal 2018, but missed the Market Intelligence consensus mean estimate of €6.33.
Net sales rose 5% to €9.18 billion from €8.72 billion. Sales jumped 21% in China and 20% in India. "We still fundamentally believe that the underlying sustainable growth story in both markets is for China high single to low double-digit value and for India low double," said Ricard.
The travel retail business reported a 6% increase driven by all regions. Sales in the Americas rose a modest 2%, dampened by the optimization of inventory by U.S. wholesalers.
Pernod, which makes Absolut vodka and Glenlivet whisky, also said it was increasing its dividend to €3.12 per share from fiscal 2019.
The company announced Aug. 29 that it proposed appointing Philippe Petitcolin, CEO of aerospace and defense company Safran, and Esther Berrozpe Galindo, former Whirlpool EMEA president, as independent directors. They will replace former Pernod Ricard CEO Pierre Pringuet and Martina Gonzalez-Gallarza, who will resign at the Nov. 8 annual general meeting. A third board member, Nicole Bouton, has elected not to stand for reappointment.
Shares of Pernod Ricard rose 3.1% to €171.75 in morning trading.
