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Pernod sees stronger profit, dividends as China sales surge
CHINA'S New Year celebrations drove a surge in demand for Pernod Ricard's spirits, helping the world's second-largest distiller boost its full-year earnings forecast and pledge bigger rewards for shareholders by overhauling its dividend policy.
Growth in profit from recurring operations will be about 6 per cent, the top end of a previous target of between 4 and 6 per cent, Paris-based Pernod Ricard said in a statement on Thursday. Its shares rose as much as 1.8 per cent in early trading in Paris.
The maker of Chivas Regal scotch also plans to pay a bigger share of its earnings in the form of dividends to shareholders, reflecting the company's accelerating profit growth and reduced debt load.
It will decide on a payout between 37 and 50 per cent of profit at the annual meeting in November, said chief executive officer Alexandre Ricard, as part of a new programme that will see annual payouts progressively lifted to about 50 per cent of earnings over the next three years from a previous rate of about one-third.
"The rationale behind this is an acceleration of our performance and significant deleveraging over the past two to three years, and that our payouts have tended to be below our peers," he said.
Lunar New Year festivities in February fell later than usual this year, making for favourable annual comparisons: Pernod Ricard joins Remy Martin owner Remy Cointreau and Hennessy maker LVMH in reporting strong sales of cognac in the country, where demand for its Martell brand lifted the group's revenue by 9.3 per cent on an organic basis in the three months through March.
Pernod Ricard's sales in the Americas rose 6 per cent, helped by Jameson Irish whiskey in the US. The company is seeking to further expand in that market by targeting acquisitions of American whiskeys. BLOOMBERG