16 February 2023
If you are covering Pernod Ricard’s latest results, please see the following comment from Chris Beckett, head of equity research at Quilter Cheviot:
“Pernod delivered strong H1 results this morning, with organic sales and profits both up 12%, beating expectations.
“Unlike most consumer categories, spirits are still achieving volume growth. Pernod’s pricing is currently up +10% and volume up +2%.
“The US market continues to do well, and we are not yet seeing the pockets of weakness that Diageo highlighted. Asia and India were also strong, and Western Europe and travel retail saw particularly good performance. China has been understandably weak, but the outlook is becoming a little more positive in light of the lifting of covid restrictions.
“Scotch and Indian Whiskies have been selling particularly well, but there appears to be a slight slowdown in premiumisation as speciality brands outperformed mainstream brands by less than in previous quarters – though this is to be expected given the rising cost of living. The only real area of weakness for Pernod has been wine sales in the UK.
“Pernod’s outlook is rather vague, but implies slowing sales growth and stable margins which would still be a good outcome. Overall, management remains confident of a strong 2023 performance.
“Spirits remain structurally better than other consumer categories. Pernod is at a slight discount to Diageo – though this is rather undeserved – but we continue to rate both stocks.”
