Fears of further lay-offs at Irish Distillers, which has been hit by a slump in the domestic spirits market, receded yesterday when parent Pernod Ricard declared the company "in excellent shape".
Amid strong overseas demand and predictions that last year's 20 per cent decline in spirit sales was close to bottoming out, Pernod seized on the publication of its annual results to deliver a vote of confidence in Irish Distillers.
Having shed 28 jobs last month, the company is strongly positioned to ride out upheavals in the domestic spirits trade, said Pernod joint managing director Mr Richard Burrows.
A 7 per cent rise in global sales of its flagship Jameson brand in 2003 underscored the company's potential for growth, he said.
Pernod blames a 42 per cent rise in spirit duties, introduced in the 2002 budget, for the depressed state of the market, saying the price of whiskey was pushed up by €5 per bottle as a result.
Irish Distillers employs 329 production staff at Midleton, Co Cork, and Bushmills, Co Antrim. Its stable of whiskeys include Jameson, Powers, Paddy and Bushmills.
Internationally, the group reported a 12.3 per cent rise in 2003 net profit to €464 million.
This was thanks in part to lower financial charges and a capital gain from the sale of bank shares.
Pernod turnover fell 27 per cent, to €3.5 billion, as a strong euro and a string of divestments undermined growth. However, sales rose 8.1 per cent, with European markets especially strong.
Negative foreign exchange effects also contributed to a 1.5 per cent decline in operating profit to €739 million in 2003.
Excluding currency effects, which cost the group €83 million, operating profit climbed 15.5 per cent.
Pernod Ricard also managed to lift its operating margin in wines and spirits by 70 basis points to 21.5 per cent, thanks chiefly to strong underlying growth.
Pernod said it was aiming for 6-8 per cent operating profit growth and 4-6 per cent sales growth per year over the next three to five years.
The Pernod group has been divesting its distribution and fruit preparation assets to focus on wines and spirits. Its key brands include Chivas Regal Scotch, Havana Club rum and Jacob's Creek.
