Pernod cuts profit predictions amid coronavirus pandemic
Jameson owner Pernod Ricard has forecast a 20% decline in operating profit for its 2020 financial year as a result of the global impact of coronavirus.
After predicting that the spread of covid-19 would have a “severe” impact on its China and travel retail business earlier this year, Pernod Ricard has updated its forecasts to reflect the “significant evolution” of the pandemic.
The French drinks producer said the spread of coronavirus was “having widespread repercussions on the business”, and predicted there will be an 80% decline in its travel retail sales from February until the end of June.
In other markets, Absolut vodka producer Pernod Ricard expects a 10% sales reduction in the off-trade from mid-March to the end of June.
In the on-trade, Pernod Ricard is predicting no sales during the same period as bars, restaurants and pubs around the world are forced to close their doors in line with social distancing rules in place to stem the spread of coronavirus.
Combined, these forecasts are thought to result in a 20% drop in Pernod Ricard’s profit from recurring operations for its 2020 fiscal year.
Alexandre Ricard, chairman and CEO of Pernod Ricard, said: “Our business model and strategy are resilient. Our three-year plan Transform and Accelerate has been very successful, as demonstrated by the FY19 and H1 FY20 results, and will continue to positively impact the business as we move through the covid-19 crisis.
“The environment has very significantly deteriorated due to the covid-19 outbreak. We are encouraged to see that, thanks to the implementation of strong measures, China appears to be starting to make a gradual recovery. While we cannot predict the duration and extent of the impact, we remain confident in our strategy.
“Our priority is to ensure the health and safety of our employees and business partners. I would like to praise the exemplary behaviour of our teams during this very difficult time.
“With the revised assumptions linked to covid-19, we are providing guidance of an organic decline in profit from recurring operations for full-year FY20 of c. -20%. We are staying the strategic course while implementing a comprehensive action plan to mitigate costs. Thanks to our solid fundamentals, rooted in employee engagement and the quality of our portfolio, I am confident in Pernod Ricard’s ability to bounce back and its growth potential.”
Last week, the spirits producer became one of the latest businesses to offer alcohol from its distilleries for the production of hand sanitiser.