RI Pernod Ricard

By Joshua Kirby

Cost discipline helped Pernod Ricard expand its margins in fiscal 2021, the French drinks group said Wednesday, as it revealed that it is taking a minority stake in a U.S. premium-focused peer.

Pernod Ricard's operating margin expanded by 213 basis points in the 12 months to end-June, the company said. This was driven by a 64-basis-point increase in the gross margin on stable pricing and better absorption of fixed costs thanks to volume growth, Pernod said.

The margin was also boosted by focusing promotional spend on growth markets and categories, and by disciplined control of structure costs, which are expected to increase strongly in the new fiscal year to support future growth, it said.

Profit from recurring operations of 2.42 billion euros ($2.86 billion) was boosted by a previously-announced drawback of EUR28 million in the U.S., relating to an August court decision allowing exporters to claim on duties already paid.

Sales growth in key markets such as the U.S., as well as China and some European countries, helped offset a decline in travel retail across the board, Pernod said, adding that it expects continued sales momentum in fiscal 2022, especially in the first quarter.

The company meanwhile said it is taking a minority stake in New York-based drinks group Sovereign Brands, whose super-premium portfolio includes French sparkling wine Luc Belaire and rum brand Bumbu. Pernod didn't reveal the financial details of the investment, but praised Sovereign Brands' history of innovation and brand creation.

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

(END) Dow Jones Newswires

September 01, 2021 03:22 ET (07:22 GMT)

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