By Dominique Vidalon and Emma Rumney
PARIS/LONDON, Feb 19 (Reuters) – Pernod Ricard reported declining sales across all five of its priority markets in the first half of its fiscal year on Thursday and group profits dropped as foreign exchange fluctuations and cost inflation compounded turmoil in its U.S. and Chinese businesses.
The French spirits company’s first-half performance was, however, broadly in line with expectations, and showed an improvement in the second quarter as other priority markets like India and global duty free improved. Pernod has promised to deliver better second half results.
It also reaffirmed guidance of between 3% and 6% sales growth between 2027 and 2029 despite an industry-wide slump in demand.
CEO Alexandre Ricard said that Pernod can meet this range even if the U.S. and China, where sales have dropped amid strain on U.S. consumer wallets, destocking and a sluggish Chinese economy, grow less than 3%.
“Beyond the U.S. and China, we have the rest of the world,” he told Reuters by phone.
The company vowed to defend its profit margin via a restructuring plan targeting 1 billion euros in savings between 2026 and 2029, which included job losses in the first half.
All spirits companies have suffered with the end of the pandemic sales boom. Demand also suffered following tariffs on cognac imports in China and on EU goods entering the United States.
Pernod – which owns Martell cognac, Mumm champagne and Absolut vodka – reported sales of 5.25 billion euros ($6.19 billion) in the six months to December 31, marking a like-for-like decline of 5.9% compared to 5.7% expected by analysts according to a company-compiled consensus.
Operating profit fell 7.5% in the first half on a like-for-like basis. Analysts expected a 7.7% fall.
($1 = 0.8579 euros)
(Reporting by Dominique Vidalon; Editing by Inti Landauro, Kevin Buckland and Elaine Hardcastle)
