Pernod Q3 sales struggle due to China slump

French drinks group Pernod Ricard has reported a 3% sales decline in its fiscal third quarter as weak demand in China offset strong performance in the US.

Overall net sales for the three months leading up to the end of March 2016 dropped to €1.855 billion, down from €1.921bn over the same period last year.

Net sales in Asia and the rest of the world dropped 10% during Q3 2015/16 with “strong growth in India and Africa” but declines in China as Scotch whisky sales continue to struggle.

The Americas delivered 5% net sales growth compared to the previous Q3 period, bolstered by a “dynamic USA” and “partly enhanced by shipment phasing”.

A “resilient” European market experienced flat net sales at 0%, driven mainly by Spain.

“Our sales growth to date at +3% is solid in an environment that remains contrasted,” said Alexandre Ricard, chairman and chief executive officer.

“Our strategy has remained consistent and is driving results: innovation is accelerating: operational excellence is driving efficiencies; our ongoing initiatives in the USA are starting to deliver; we are working actively to develop the new phase of growth in China, where we remain confident in the medium-term potential despite tough current context.

“We confirm our FY16 guidance of organic growth in profit from recurring operations between +1% and +3%.”

Overall, year-to-date sales for 2015/16 are “solid” at 4% growth, attributed largely to the positive impact of the US dollar.

The firm’s top 14 brands grew 1% in the nine-month period spearheaded by Jameson Irish whiskey and innovation.

Meanwhile, local brands rose 7% driven by Indian whiskies.