Not fazed by debt burden

Pernod Ricard said that the average cost of debt should be less than 5 percent for the full year 2008/09 and close to 4 percent for 2009/10, based on current interest rates and current hedging.

Pernod Ricard’s 2008/09 first half-year consolidated net sales (excluding tax and duties) rose 13 percent to EUR 4.2 billion, compared to EUR 3.7 billion in the first half-year 2007/2008 thanks to strong organic growth (+5 percent), and the integration of V&S (Absolut vodka) from 23 July. Gross margin grew 18 percent to EUR 2.5 billion.

Profit from recurring operations grew by 24 percent to EUR 1.2 billion. The operating margin was 28.4 percent, Pernod Ricard announced, an improvement of 240 basis points compared to the previous financial year.

Because of an increase in sales, Pernod Ricard felt justified in raising its marketing budget to EUR 731 million (up 17 percent) during the six months up to the critical Christmas season. The advertising and promotion expenditure to sales ratio reached 17.3 percent over the 2008/09 first half-year, compared with 16.8 percent over the same period of the previous financial year.

Despite “lack of visibility” (that means its crystal ball is cloudy), Pernod Ricard, for the full 2008/09 financial year, is aiming for profit growth between 5 percent and 8 percent with an average cost of borrowing below 5 percent.

Well, good luck to you.