French wines and spirits group Pernod Ricard reported a stronger-than-expected 9.1 percent rise in underlying second-quarter sales and raised its profit guidance, sending its shares sharply higher.
In a statement on Thursday, Pernod said it was now aiming for full year like-for-like growth in operating profit from ordinary activities of about 12 percent compared with a previous estimate of 10 percent.
"I could describe this first half year as historic, given the outstanding sales dynamism," Chairman and Chief Executive Patrick Ricard said in a statement.
The maker of Jameson whiskey and Martell cognac said sales in its second quarter ended Dec. 31 rose 5.2 percent to 2.16 billion euros ($3.2 billion), above all forecasts in a Reuters poll of analysts forecasts whose average was 2.10 billion.
Pernod said second-quarter like-for-like sales growth was 9.1 percent compared with 7.2 percent expected in the Reuters poll. Its more profitable spirits business grew 9.5 percent, while its wine business -- including Mumm champagne and Jacobs Creek table wines -- grew 7.6 percent.
Pernod shares rose sharply on the news, climbing more than 15 percent and -- hammered recently on concern about U.S. consumer demand -- were 7.7 percent higher at 68.85 euros.
"It's a mixture of macroeconomics, the continued demand in emerging markets and some developed markets like France, and strength of demand for its key premium brands," said WestLB analyst Ben Maitland.
"There was concern that consumers would begin trading down but the premiumisation trend appears very well intact."
He said WestLB would probably raise its earnings forecasts by a "low single digit" amount following the figures.
Addressing market fears of a possible consumer slowdown in the United States, Pernod said U.S. growth was similar between the first and second quarters. It noted emerging markets contributed two thirds of the group's first half sales growth.
Chief Financial Officer Emmanuel Babeau told Reuters in an interview that Pernod lacked visibility on final consumer demand in the United States, after sales to distributors suffered in the second half of calendar 2007.
He said, however, the group expected continued "solid growth" in the United States thanks to its premium brands and saw no signs of slowdown in China, Russia or India.
"We see consumption remaining very sustained on these markets in 2008 and are very confident the momentum will last," Babeau said. "There are no signs of a slowdown in western Europe today."
Babeau reaffirmed Pernod's interest in acquiring either Absolut vodka maker, Vin & Sprit, or full rights to Russia's Stolichnaya vodka. He said Pernod was also close to acquiring small French aperitif maker Lillet, which had sales of 3.7 million euros in 2006.