Lower China demand leaves Pernod sales woozy

21st April 2016, Comments 0 comments

World number two spirits producer Pernod Ricard said Thursday a falloff in Chinese demand left its sales woozy but hearty US thirst enabled it to toast nine-month sales growth of 4 percent.

In the three months to March, the third quarter of the company's financial year, sales slipped 3.0 percent to 1.8 billion euros ($2.1 billion) on currency tailwinds without which Pernod would have managed a 1.0 percent rise, the French company said.

"We can class this quarter as resilient," CEO Alex Ricard told AFP.

"That allows us to confirm our annual growth objective for full year organic growth (excluding acquisitions) of between 1.0 and 3.0 percent," Ricard added.

But Chinese sales were "worse than forecast," according to analysts at Bryan Garnier, and Pernod Ricard shares were off 6 percent in late morning trading on the Paris bourse.

A strong dollar enabled "a dynamic US" to cushion the Chinese tipple dip as American gains hit 5 percent to $529 million in the third quarter for a 7 percent gain over nine months, the group said.

The group's top brand Jameson whisky was a particular bright spot with a 23 percent rise over nine months according to Nielsen data, with Ricard saying marque innovation and "operational excellence" had boosted efficiency.

Pernod added it was working on Chinese growth, with Ricard expressing medium-term confidence despite the "tough current context" as "the fundamentals are there."

Pernod said an early Chinese New Year had hit Asian sales but registered what it termed dynamic growth in India and Africa.

Scotch was on the rocks compared to cognac, which Pernod said had been proving "much more resilient" in China.

Ricard said "China remains for us an extremely profitable market -- our margins remain well above the group average" there despite a 10 percent sales tailoff over nine months.

In contrast, sales raced ahead 14 percent in India and 16 percent in Africa and the Middle East.

European sales in the year to date were stable, highlighted by an 8 percent rise in Spain while Passport and Priority Premium Wines were up 4 percent pushed by strong demand in Britain and, further afield, Australia.

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© 2016 AFP

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