China woes drag down Pernod Ricard first quarter sales

FRENCH spirits maker Pernod Ricard said it still expected to return to sales growth in the 2024/25 fiscal year, despite reporting a bigger-than-expected fall in first quarter sales, caused partly by weakness in China.

Pernod, which owns Martell cognac, Mumm champagne and Absolut vodka, reported sales of 2.783 billion euros (S$4 billion) from July to September, a like-for-like decline of 5.9 per cent and worse than an analyst consensus for a decline of 4.8 per cent.

The drop came amid weak consumer demand in China and persistent challenges in the US.

Bernstein analysts said results “lightly” missed expectations. Pernod shares were up 0.28 per cent at 0712 GMT.

French luxury giant LVMH also missed estimates for its third quarter sales on Tuesday, also pointing to China, with the company’s CFO saying consumer confidence in the country had slumped to all-time lows.

“In China, we expect a worse year than last year,” Pernod Ricard chief executive Alexandre Ricard told Reuters, referring to the 2024/25 fiscal year that started on Jul 1. Sales in China fell 10 per cent last year and were down 26 per cent in the first quarter.

Pernod, the world’s second-biggest spirits group behind Diageo, is facing additional headwinds in the country, after Beijing imposed temporary anti-dumping measures on brandy imports from the European Union last week.

It plans to re-allocate marketing spend to mitigate the impact of the tariffs, said Ricard, and is aiming to protect its operating margin despite the trade measure.

China’s probe should be finalised by the end of October, he said. REUTERS