Pernod growth thwarted by ailing China

12 February, 2015

Pernod Ricard has reported sales and profit growth of +1% for H1 2014/2015, after declines in China and the US halted overall advances.

Now under Alexandre Ricard’s leadership, the French group said sales growth would have been +2% but for a later-falling Chinese New Year.

China continues to suffer, with sales for the second half of 2014 dropping to -16%, (or -6% if restated for Chinese New Year phasing), with cognac (-7%) and scotch (-11%) both showing further depletions in the market.

"Continued macro-economic slowdown and anti-extravagance campaign pressure" were blamed for the losses.

Asia and ROW, excluding China, saw growth of +6%, with strong volume growth of local and imported whiskies propelling sales in India forward +19%. Japan grew bounced to +7% while Africa saw continent growth in double digits.

Pernod’s Americas region stood at +2% for the half year, with growth tempered by the its performance in the US, which was -2%. Here “macroeconomic environment and consumer sentiment” is “improving, but not yet fully filtering through to spirits’ consumption”, according to Pernod.

Absolut remains “under pressure” in the US, in what is considered a “challenging environment” but Jameson and Martell have kicked on, both showing double digit growth, the group said.

Excluding the US, sales in the Americas were a healthily +6% with good growth in Mexico thanks to Absolut, Chivas and Martel, while Brazil and Argentina’s sales increased by double digits.

Pernod’s sales have stabilised in Europe with Spain in growth for the first time in six years. Its +2% was attributed to Beefeater and Seagram’s growth.

While the UK drove regional growth with +7% gains. The group's T14 brands performed well in the market, with momentum gained from Absolut and Campo Viejo.

Effects of instability in Russia (+6%) are largely yet to take hold as “consumers buy ahead of [an] anticipated price increase".

Alexandre Ricard, chairman and CEO said: “Our H1 results are solid and in line with the guidance given in October. Our Sales are gradually improving despite an environment that remains challenging.

“Heartened by this encouraging first semester, we confirm our full year guidance of growth in profit from recurring operations between +1% and +3%.

“I am confident in the strength of our portfolio of premium brands and of our global network that support our three strategic growth pillars: premiumisation, expansion and innovation.”

Keywords: pernod sales

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