(Bloomberg) -- China’s New Year celebrations drove a surge in demand for Pernod Ricard SA’s spirits, helping the world’s second-largest distiller boost its full-year earnings forecast and pledge bigger rewards for shareholders.
Growth in profit from recurring operations will be about 6 percent, the top end of a previous target of between 4 percent and 6 percent, Paris-based Pernod Ricard said in a statement Thursday. Its shares rose as much as 1.8 percent in early trading in Paris.
The maker of Chivas Regal scotch also plans to pay a bigger share of its earnings as dividends, reflecting the company’s accelerating profit growth and reduced debt. Pernod Ricard will decide on a payout between 37 percent and 50 percent of profit at the annual meeting in November, Chief Executive Officer Alexandre Ricard said by phone, as the company lifts payouts to as much as half of earnings over the next three years.
“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,” Ricard said.
China’s lunar New Year festivities in February fell later than usual this year, making for favorable annual comparisons. Pernod Ricard joins Remy Martin owner Remy Cointreau SA 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 percent on an organic basis in the three months through March. Analysts expected 6.5 percent growth
Pernod Ricard’s sales in the Americas rose 6 percent, helped by Jameson Irish whiskey in the U.S. The company has said it’s seeking to further expand in that market via acquisitions.
The spirits maker sees a full-year negative currency impact of about 200 million euros on profit, Ricard said.
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