Pernod sees ‘improvement’ but China ‘difficult’

Beefeater gin and The Glenlivet Scotch producer Pernod Ricard has witnessed a “gradual improvement” in its first quarter sales despite continued “difficulty” in China.

The Glenlivet has helped Pernod Ricard post single-digit sales growth in its first financial quarter

The French drinks group saw an organic sales growth of 3%, totaling €2.223 million, while reported sales grew 9% in the period due a “favourable foreign exchange impact”.

Performance was driven by the US and an overall improved performance in the Americas, where sales increased 6%.

While a “good start” was experienced in Europe, growth “decelerated” to +1% in Asia and Rest of World (RoW) markets due to a “difficult environment in China”, where an austerity campaign is ongoing.

However, the group’s top 14 key brands saw a 2% sales growth overall, spearheaded by Jameson Irish whiskey and The Glenlivet Scotch whiskey. Its local brands grew 5% thanks to its Indian whiskies and Passport Scotch label.

“The beginning of the financial year is consistent with our scenario of continued gradual improvement in sales in a contrasted environment, said Alexandre Ricard, chairman and CEO of Pernod Ricard.

“We are aiming for +1% to +3% organic growth in profit from recurring operations for FY 2015/16 and we expect a positive but volatile foreign exchange impact.”

“We continue to implement our long-term growth strategy, while increasing investments behind our priority brands and innovations and remaining very disciplined on costs and pricing.”

Overall, Pernod Ricard expects foreign exchange rates to knock €20m off its profits from recurring operations in 2015/16.

The group was hit by a 15% net profit drop in its 2014/15 full-year results after taking an €404 million impairment charge on Absolut Vodka.