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Pernod returns to growth as China woes ease

Pernod Ricard recorded a return to growth for the first quarter of its current financial year as China’s sales slump finally starts to improve.

Pernod Ricard has reported a return to growth for Q1 of its 2014/15 financial year

The French drinks firm reported organic sales growth of 2% with sales for the first quarter of 2014/15 equating €2,037 million, despite experiencing significant sales decline in China last year due to the Chinese government’s on-going anti-corruption campaign.

Shipments to China increased by 4% and while Scotch is still in decline in the country, Martell is showing resistance driven by Noblige.

Europe reported a “mixed performance” resulting in a 1% decline in sales, while Asia and the Rest of the World witnessed a “gradual improvement” of 4% and the Americas continued to grow by 3%.

India experienced an “excellent” start to the fiscal year growing 21% driven by the Top 14 and Indian whiskies.

Meanwhile, Africa and the Middle East also continued to display strong growth driven by the Top 14, particularly Chivas, Absolut, Jameson, Ballantine’s and Martell.

Alexandre Ricard, chief executive officer and chief operating officer, predicted further sales growth during the rest of the financial year.

“For the full financial year we anticipate a gradual improvement in sales, in an environment that will remain difficult,” said Ricard.

“We plan to increase investment behind our priority brands and innovations. As a result, our 2014/15 guidance is organic growth in profit from recurring operations between +1% and +3%.”

Pernod Ricard hopes to save more money through the rollout of project Allegro, which was implemented at the start of 2014 and is expected to save €150 million over the next three years.

At the end of August, the company announced 900 jobs would be axed globally.

“The roll-out of project Allegro will contribute to strengthening our operational efficiency,” commented Pierre Pringuet, chief executive officer.

Diageo reported a weak start to the financial year with net sales down 1.5% in the first quarter, while Rémy Cointreau posted a significant sales decline 15.5% blaming the Asia-Pacific market and continued destocking in China.

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