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Pernod Ricard H1 Net Profit Down, Sales Rise; Lifts FY Profit Growth View

French drinks company Pernod Ricard SA (PDRDF.PK,PDRDY.PK,PRN.L) reported Thursday that its first-half group share of net profit dropped 11 percent to 1.02 billion euros from last year's 1.15 billion euros.

Group share of net profit from recurring operations grew 11 percent to 1.11 billion euros from 994 million euros a year ago.

Net sales increased 5 percent to 5.194 billion euros from last year's 4.94 billion euros. Organic net sales growth was 8 percent.

In the second quarter, sales were 2.80 billion euros, up 3.2 percent on a reported basis and up 5.6% organically.

Looking ahead for the second half, the company said growth is expected to moderate due to Martell sustainable growth management, wholesaler inventory optimisation in USA and a commercial dispute in France and Germany.

Further, second half margin would be softer due to managing Martell growth sustainability, finished goods' inventory optimisation in USA and A&P phasing.

Regarding fiscal 2019, Alexandre Ricard, Chairman and Chief Executive Officer, said, "For full year FY19, in an environment that remains uncertain, we aim to continue dynamic and diversified growth across our regions and brands. ..We are increasing our guidance for FY19 organic growth in Profit from Recurring Operations to between +6% and +8% while improving operating leverage by c. 50bps. We will continue to roll out our strategic plan, focused on investing for sustainable and profitable long-term growth."

The company previously expected organic growth in Profit from Recurring Operations of between +5% and +7%.

For the 2019 to 2021 period, the company projects 4% to 7% topline growth, leveraging key competitive advantages and consistent investment behind key priorities.

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