RI Pernod Ricard

By Joshua Kirby

Pernod Ricard SA isn't seeing any hit to its sales from rising inflation and lower consumer spending power, and plans to use further price increases to fuel its top line in the second half of the fiscal year.

Setting out results for the six months to Dec. 31, the French drinks group said Thursday that a strong pricing dynamic and a premium portfolio had helped it maintain sales growth at 12%, and to shore up its profit margins.

Recurring operating profit rose at the same pace as sales, climbing 12% to 2.42 billion euros ($2.59 billion) for the half-year.

The maker of Martell cognac and Absolut vodka in fact posted a slight pick-up in the pace of sales growth in the latter three months, despite weakness in China, where strict sanitary measures remained in place for much of the period. Second-quarter sales totalled EUR3.81 billion, ahead of analysts' expectations according to a FactSet-compiled poll.

Growth was helped in the Americas by favorable U.S. shipment phasings and by a general recovery of the travel-retail business, Pernod Ricard said. But pricing was also key, outweighing volume growth for several of its strategic brands including Martell, coconut liqueur Malibu and Scotch-whisky brand Ballantine's.

"Particularly strong pricing dynamic illustrates the attractiveness of our portfolio of premium brands and enabled us to sustain margins in an inflationary context," Chief Executive Alexandre Ricard said. The company said it plans further price increases in the second half of the year.

The group didn't set out numerical guidance but said it expects further top-line growth in the rest of the fiscal year, though it noted that this would be in the context of a "normalizing environment." It also expects to sustain its operating margin, despite a planned step-up in investment in capital expenditure and in its strategic inventories. The company will focus on operational efficiency in order to offset cost inflation, it said.

The company will launch a share buyback of EUR300 million imminently. The buyback is part of a EUR750 million program for fiscal 2023 set out last year.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

February 16, 2023 02:41 ET (07:41 GMT)

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