- Sales in three months to end of September fall 5.9% to EUR 2.78bn (US$3.01bn)
- China slumps by 26%, US sales decline 10%
- Fiscal full year – to end of June – forecast to return to sales growth
The financial year to the end of June has got off to a challenging start for Pernod Ricard with sales in the three months to 30 September decelerating by mid-single digits.
The near-6% top-line slide in fiscal Q1 was down in no small part to a tough three months in China for the Martell cognac brand owner. While Martell was singled out for having contributed to the weak performance in the country, the brand is poised to have a particularly challenging time ahead, following this month’s implementation of higher tariffs on brandy from the European Union by the country’s authorities.
Pernod Ricard said in today’s results announcement that “actions are being taken to mitigate the impact” of the move, although specific details were not disclosed.
With commentary prioritised from a regional angle, China’s “softer than previously expected” sales – the global travel retail channel in Asia was also impacted by the country’s sales decrease – was joined by the US, which delivered a 10% slide as the country’s “spirits market continues to normalise”. Elsewhere, disappointing weather during the quarter in Europe also hampered performance for the company.
Although all three reporting regions came in down on the same period in 2023, bright spots appeared in GTR, where sales were up 3%, and India, rising 2% yet hit by phasing issues. The latter are set to correct during the current quarter, which runs until the end of December.
While Q1 volumes were described as having been “stable”, Pernod Ricard flagged a “moderated pricing environment” as the cause of a -6% price/mix effect for its portfolio.
“Leveraging our … balanced footprint, we reiterate our confidence in our medium-term financial framework of aiming for the upper end of +4% to +7% … sales growth,” the group said. “For fiscal 2025, we expect … sales back to growth with continuing volume recovery … .”
Earlier this week, champagne & spirits peer Moët Hennessy booked a 7% decline in sales from the same three-month period.
