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Pernod Ricard Shares Drop On China And US Sales Warning

By Donna Ahern
Pernod Ricard Shares Drop On China And US Sales Warning

Pernod Ricard warned that sales would decline in Chinese and US markets in its first quarter to 30 September, sending shares in the drinks group down 4% on Thursday despite forecast-beating annual results.

The owner of Mumm champagne and Absolut vodka said the business environment remained volatile but it expected net sales growth for its 2023/24 financial year, with easing inflationary pressures helping its organic operating margin.

However, challenging macroeconomic conditions are expected to drive down sales in China during its first quarter, the group said, adding that a high year-on-year comparison basis will ease from the second quarter.

Decline Expectations 

Its US first-quarter sales are also expected to show a decline from a strong corresponding period last year, but the company said the full-year outlook is positive.


"There is an economic slowdown in China, (and) difficulties in the property market ... we are seeing some caution from wholesalers in China," Chairman and CEO Alexandre Ricard told Reuters by phone.

"China's fundamentals, however, remain very solid", Ricard added, saying he was confident about the group's ability to continue implementing price increases in the country.

Asked to comment on Chinese consumer behaviour, Ricard noted that consumers are going out less.

"The channels suffering most is on-trade," he said. "Night clubs are suffering big time, though we are seeing the emergence of live bars."

The world's second-biggest spirits group behind Diageo said that, with recurring free cash flow at €1.653 billion ($1.8 billion), it was offering shareholders a 14% dividend increase to €4.70 per share and a new buyback scheme worth between €500 million and €800 million.

News by Reuters edited by Donna Ahern, Checkout. For more drinks stories click here. Click subscribe to sign up for the Checkout print edition.

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