Pernod Ricard 2020 financial forecast improves

Jameson owner Pernod Ricard does not believe the Covid-19 pandemic will hit its full-year profit as strongly as initially expected and now forecasts a 15% decline in operating profit for its 2020 financial year.

Jameson Irish whiskey is owned by Pernod Ricard

On 24 March, Pernod Ricard believed the impact of the pandemic would lead to a 20% organic decline in profit from recurring operations for full-year 2020 – 5% more than is now expected.

This was attributed to “very limited business” in China during February and March, plus a slow recovery from April.

Also, Pernod Ricard’s travel retail business experienced an 80% decline from February to the end of June as the market drastically slowed due to travel restrictions brought on by the pandemic.

Furthermore, in other markets, the off-trade, which represents around 75% of sales, witnessed a sales drop of around 10% from mid-March to the end of June.

The on-trade, which represents around 25% of sales, saw sales stop altogether from mid-March to the end of June as venues closed or did not re-order.

In a statement, Pernod Ricard said: “On balance, these assumptions have proven to be directionally correct, in particular as regards China and travel retail.

“There have however been some notable differences, mainly with India being subject to a full six-week lockdown of all sales and production, but more resilience in the off-trade, especially in the USA and Western Europe.

“As a result, and thanks to strong cost mitigation, Pernod Ricard now expects an organic sales decline in profit from recurring operations for FY20 of c. -15%.”