Pernod on track as Seagram brands recover
cent rise in sales in the first quarter, its first reporting period
since taking over 17 Seagram brands, and said it was on track to
meet its full-year targets.
French wine and spirits group Pernod Ricard has posted a 20.8 per cent rise in sales in the first quarter, its first reporting period since taking over 17 Seagram brands, and said it was on track to meet its full-year targets.
Pernod, the world's third largest alcoholic drinks firm after Diageo and Allied Domecq, said in a statement that sales in the quarter rose to €1.19 billion from €985.3 million a year earlier, a rise of 4.2 per cent excluding acquisitions and currency effects.
The figure, pushed down in part by sell-offs in its SIAS-MPA fruit preparations businesses, was in line with forecasts.
In its core wines and spirits business, which for the first time included brands like Seagram's Gin, Martell Cognac and Chivas Regal Scotch acquired in December, sales surged 75 per cent to €644 million. Excluding acquisitions and currency effects, the rise was a much more modest 3.1 per cent.
The newly acquired Seagram brands, some of which suffered from overstocking prior to the deal's completion, contributed €250 million to the sales in the core wines and spirits business, Pernod said.
Joint managing director Pierre Pringuet told reporters that Pernod's first-quarter turnover left it confident it would achieve its targets for 2002.
Pernod is aiming for sales of €3.6 billion in its core wines and spirits business, up 90 per cent from 2001.
It is also banking on a 50 per cent leap in earnings per share, from €4.24 in 1999 when the Seagram acquisition was announced, and an operating margin of about 21 per cent, after 17.9 per cent in 2001.
Pringuet said Pernod, in the process of divesting non-core assets, was confident it would sell its BWG distribution unit to British venture capital fund Electra "in the coming weeks".
"We have an agreement in principle with Electra," he said. Antitrust vetting could add another two to three months to finalisation of the deal, he added.
Pernod estimates costs linked to the Seagram acquisition, including losses from overstocking - whereby spirits were sold onto the market in greater volumes than it could absorb before the deal was closed - at €60 million.
Pringuet said Pernod would seek compensation on the order of €20 million to €25 million in relation to that overstocking, which pushed first-quarter volumes of Martell and Chivas down 18 per cent and 15 per cent respectively.
Negotiations with Vivendi Universal, from whom Pernod bought the Seagram brands, were likely in the second half, he added.
Since April, the Seagram brands have begun to show a positive trend, with most of the overstocking absorbed by the end of March, Pringuet said.