Jameson-owner Pernod Ricard 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 and Chandon champagne.
Sales at the world’s second-largest distiller grew 1.3 per cent on an organic basis in the first quarter. Analysts expected 3.1 per cent. The shares fell as 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 Alexandre Ricard said, adding that the distiller remains “perfectly in line” with its road-map. The basis of comparison will be more favourable in the second half, Mr Ricard said.
The maker of brands including Beefeater and Havana Club as well as Jameson confirmed its outlook for earnings growth to slow this year to 5 per cent to 7 per cent from its fastest pace in seven years.
Growth in the key US market, where the company is contending with the threat of tariffs on Jameson and Glenlivet, reached 6 per cent.
Local bourbons
Pernod Ricard has added local bourbons to its arsenal in recent years, including the $223 million (€200 million) acquisition of Castle Brands announced in August.
The group said it may raise prices on its spirits to counter US trade tariffs, at a time when it is also grappling with decelerating growth rates in key markets like China and India.
It is under pressure from US hedge fund Elliott, which holds a 2.5 per cent stake, to improve profit margins and corporate governance. – Bloomberg/Reuters
