By Dominique Vidalon
PARIS (Reuters) -Pernod Ricard cautioned that sales would decline in the key Chinese and U.S. markets in the first quarter through September, driving its shares down 4% on Thursday despite forecast-beating annual results.
The owner of Mumm champagne and Absolut vodka said that in an environment which remained volatile it expected broadbased net sales growth for the full year 2023/24.
However, challenging macroeconomic conditions would drive down sales in China in the first quarter, with a high year-ago comparison basis expected to ease from the second quarter, the group said in a statement.
In the United States, a high comparison basis would also lead to a sales decline in the first quarter, but with a positive outlook for the full year, it added.
“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 about Chinese consumer behaviour, Ricard said: “Consumers are going out less … The channels suffering the most is on-trade.
Night clubs are suffering big time, though we are seeing the emergence of live bars.”
The world’s second-biggest spirits group after Diageo said that with recurring free cash flow at 1.653 billion euros ($1.8 billion), it was offering shareholders a 14% dividend hike to 4.70 euros per share and a new buyback scheme worth between 500 million and 800 million euros.
Over the 12 months to June 30, 2023, profit from recurring operations reached 3.348 billion euros, an organic or self-generated rise of 11%, beating analysts’ expectations of a 9.6% rise and the company’s guidance for around 10%.
Sales reached 12.137 billion euros, an organic rise of 10%, with sales in the fourth quarter alone climbing 19%, led by a recovery in demand for its Martell cognac in China, where Pernod Ricard increased prices in May.
Building on the strong performance for fiscal year 2022/23, Pernod Ricard said it was “confidently” reiterating its mid-term financial goals for fiscal 2023 to fiscal 2025, aiming for the upper end of a 4% to 7% net sales growth range and a 50-60 basis points increase in operating margin.
(1 = 0.9162 euros)
(Reporting by Dominique Vidalon; Editing by Muralikumar Anantharaman and David Holmes)
