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Pernod beats expectations as US consumers splurge on whiskey, China sales jump

Reuters

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Pernod beats expectations as US consumers splurge on whiskey, China sales jump

Screenshot from Pernod Ricard website

Pernod Ricard, the world's 2nd biggest spirits group after Diageo, posts double-digit sales growth in China and a 5% sales rise in the United States

Pernod Ricard said on Thursday, February 11, it expects organic sales to return to growth in the full year, after strong performances in its key United States and Chinese markets helped the French spirits group beat 1st half profit and sales forecasts.

Double-digit sales growth in China and a 5% sales rise in the United States propped up results for Pernod, the world’s 2nd biggest spirits group after Diageo.

In the United States, Pernod Ricard’s top market, stuck-at-home consumers splurged on its Jameson Irish whiskey and Martell cognac while a cocktail craze also lifted demand for Malibu rum and premium Avion tequila.

Last month, rival Diageo also reported an unexpected rise in 1st half underlying net sales growth as its premium tequila and bourbon flew off the shelves at US retail stores.

Still, Pernod said the COVID-19 crisis would continue to weigh on duty-free sales – which slumped 47% in the 1st half of its fiscal year that began on July 1 – and disrupt alcohol consumption in bars and restaurants.

Chairman and chief executive officer Alexandre Ricard told Reuters he expected organic sales growth in the 2nd half to “more than offset” the 3.9% decline in the 1st half.

Still, there was disappointment among investors that Pernod Ricard did not commit to precise figures for sales and profit guidance for the full year and its shares fell 2.2% by 1030 GMT.

“The sanitary situation is far from stabilized. There are lockdowns in some countries. We still have no clear view on the Chinese New Year and vaccines are taking time,” Ricard told analysts.

Ricard was cautiously optimistic” ahead of the Chinese New Year celebrations that start on Friday, February 12, saying he will not have “real data-driven feedback” on Chinese sales before the end of March-early April.

Pernod said profit from current operations in the 6 months to December 31 reached 1.595 billion euros ($1.93 billion), an organic decline of 2.4% that was still better than analysts’ expectations for a 7.9% fall.

This reflected tight control over costs and lower promotional spending in businesses and markets where demand was subdued such as travel retail. Advertising and promotional spending was set to increase in the 2nd half to around 16% of sales for the full year.

Sales totaled 4.985 billion euros in the 1st half, representing an organic decline of 3.9%, compared with analysts’ expectations for a 5.4% drop.

Last month, smaller French peer Remy Cointreau beat 3rd quarter sales forecasts and said it was confident that demand for its premium cognac in China and the United States would fuel a profit recovery this year. – Rappler.com

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