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Pernod Ricard profits boosted by acceleration in Americas, new products

Pernod Ricard, the world’s second largest distiller by sales, said on Thursday that it increased net profits by 13 per cent in its latest fiscal year and sales surpassed €9bn for the first time, driven by acceleration in its Americas division, innovation and strong
performance from its international brands.

The maker of Absolut vodka, Chivas Regal whisky and Perrier-Jouët champagne, said that stripping out the impact of currencies and acquisitions, sales grew 3.6 per cent in the 12 months to the end of June, to €9bn, in line with analyst expectations. Net profits
increased 13 per cent during the year to €1.4bn.

A third of the group’s growth was driven by innovation, which it defines as new products or variations of existing products, like Absolut Lime vodka or Jameson Black Barrel. China returned to sales growth for the first time since 2013. Meanwhile the Americas region
grew 7 per cent and Europe was up 3 per cent.

Since Alexandre Ricard took over as chairman and chief executive of the family business in February 2015, Pernod Ricard has adapted its business to appeal to millennial consumers.

Mr Ricard said: “Millennials have moved from loyalty to one brand to loyalty to a repertoire of brands, which we call moments of consumption. They’re digitally savvy, they love innovation and they have developed a taste for new variations. They travel a lot.”

Free cashflow increased 22 per cent to €1.3bn, bringing the net debt to Ebtida ratio down to 3.0 at the end of June from 3.4 a year earlier.

Since the end of Pernod Ricard’s 2017 fiscal year the dollar has depreciated against the euro. The group warned that currency is estimated to have a negative impact of €125m on its profits in the 2018 fiscal year, based on average foreign exchange rates August 22
projected forward. It guided at organic growth in profits of between 3 per cent and 5 per cent for 2018.