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.

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%.”