Pernod Ricard Reports a Slowdown in Asian Demand
(Bloomberg) -- Pernod Ricard SA began its fiscal year on a tepid note as demand for cognac in China slowed after stellar growth this time last year. The slowdown in Asia contrasts with a strong performance by rival LVMH’s wine and spirits division, which includes Belvedere vodka and Moet & Chandon champagne.
- Sales at the world’s second-largest distiller grew 1.3% on an organic basis in the first quarter. Analysts expected 3.1%. The shares fell as much as 3.3% in early Paris trading.
- Pointing to a “particularly uncertain” environment, Pernod Ricard predicted growth rates will moderate from last year in India and China, where sales slowed dramatically from last year.
- “It’s what I expected and what we had shared with the markets a month ago,” Chief Executive Officer Alexandre Ricard said by phone, adding that the distiller remains “perfectly in line” with its road-map. The basis of comparison will be more favorable in the second half, Ricard said.
- The maker of brands including Jameson, Beefeater and Havana Club confirmed its outlook for earnings growth to slow this year to 5% to 7% from its fastest pace in seven years.
- Growth in the key U.S. market, where the company is contending with the threat of tariffs on its popular Jameson Irish whiskey and Glenlivet Scotch brands, reached 6%. Pernod Ricard has added local bourbons to its arsenal in recent years, including the $223 million acquisition of Castle Brands announced in August.
- Pernod Ricard shares were 2.2% lower at 162.90 euros at 9:28 a.m. in Paris. The stock has gained 14% so far this year.
- While moderation in growth was expected, “it does seem that this is about more than just tough comps,” RBC analyst James Edwardes Jones wrote in a note. “Pernod Ricard has flagged a challenging on-trade environment in China.”
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