FRANCE – French spirits giant Pernod Ricard reported a decrease in sales for its fiscal third quarter, citing challenges stemming from soft consumer sentiment in China and inventory adjustments in the U.S.
The company revealed that sales fell 2 percent in reported terms to €2.35 billion (US$2.51 billion) for the three months ending in March, falling short of analysts’ expectations.
The weak performance in China was attributed to a difficult macroeconomic environment, leading to a 12 percent drop in sales. Similarly, in the U.S., sales declined by 11 percent as trade inventory levels were adjusted, reflecting a normalization in consumer demand following pandemic-induced trends.
Despite the overall sales decline, Pernod Ricard highlighted positive growth drivers in specific regions. In Africa and the Middle East, the company recorded strong double-digit growth, driven by key markets such as Turkey, South Africa, and Nigeria. Notably, brands like Chivas Regal, Ballantine’s, and Jameson contributed significantly to this growth.
In China, Pernod Ricard’s cognac brand, Martell Noblige, performed well despite challenges posed by an anti-dumping investigation on brandy imported from the European Union. The gradual recovery of Chinese travellers also boosted the company’s travel retail sales, indicating signs of improvement in the region.
Despite the third-quarter sales setback, Pernod Ricard reaffirmed its mid-term financial targets, aiming for net sales growth between 4 percent and 7 percent and organic operating leverage of 50 to 60 basis points.
Additionally, the company expects broadly stable organic net sales for the current year while focusing on growth and operational efficiencies.
Pernod Ricard also adjusted its organic profit from recurring operations estimate to around 1 percent, down from previous expectations of low-single-digit growth.
The company remains committed to returning value to shareholders, announcing an interim dividend of €2.35 per share to be paid in July, with the final dividend subject to the decision at the annual general meeting in November.
In line with its strategic expansion plans, Pernod Ricard announced earlier this year its intention to invest US$216.48 million in a malt distillery in India.
With India poised to become the leading market for the company in the next decade, Pernod Ricard aims to triple its net sales in the country, positioning it as a key growth driver in its global portfolio.
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