FRANCE – The world’s second-largest wine and spirits seller, Pernod Ricard, is planning to accelerate spending on CAPEX, investments a company makes that are designed to be used over the long term, in this new financial year to “protect the future growth” of its brands, particularly aged spirits.

The Chivas Regal Scotch and Martell Cognac maker said in this financial year which started in July, it plans to spend around 7% of its “net sales and strategic inventories” on CAPEX, up from 4.5% in the year previous.

CFO Hélène de Tissot explained: “It makes lots of sense when you look, by the way, at our strong performance, especially when you look at the performance of our aged portfolio whiskeys in Scotch whisky, Irish whiskey but as well US whiskey.”

“The main driver of this acceleration is to protect the future growth of those brands, mainly our distillation capacity, casks, and warehousing. There is some inflation impacting those numbers but I think what is really key to have in mind is this acceleration of growth that we are protecting through those investments.”

The increased investment over the next few years will be ushered in by a new project which the company is going to announce in the coming months.

chairman and CEO Alexandre Ricard said: “We will be making a pretty significant great announcement next week and I don’t want to spoil the news for the teams who have been working on that. We will be announcing something pretty, pretty nice next week on that front.”

“When you look at our growth rates and our medium-term ambitions, we need the strategic stock and the capacity to fuel that growth.”

Meanwhile, the France-based wine-and-spirits major has reported a net sales jump of 21% to EUR10.7bn (US$10.72bn), backed by the recovery of the on-trade and travel retail from the worst effects of the Covid-19 pandemic.

In the 12 months to the end of June 2022, Pernod Ricard saw an organic sales rise of 17% while the share of net profit was up 53%, at just short of EUR2bn.

Both Pernod Ricard’s organic net sales and underlying EBIT results were above the consensus expectations of equity analysts covering the company.

The brewery giant also posted a “profit from recurring operations” (essentially underlying EBIT) of EUR3.02bn, which it said was 25% higher than the year previous – and a record for that metric which rose 19% on an organic basis.

Mr. Ricard said the company had seen “excellent broad-based growth” across its product portfolio and said “revenue growth management and operational efficiencies” had also contributed to the group’s higher profits.

He added that the company has had “a pretty good start to Q1” and expects to see “dynamic, broad-based, net sales growth, on a normalizing comparison basis”.

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