Pernod Ricard forecasts return to growth in 2025
Pernod Ricard FY sales drop 1%, in line with forecasts
Spirits maker says sales will grow next year
Analysts, investors express scepticism over medium-term targets
China opts against provisional tariffs on EU brandy, shares surge
Updates shares in paragraph 7 to reflect China EU brandy probe decision
By Emma Rumney
Aug 29 (Reuters) -France's Pernod Ricard PERP.PA on Thursday forecast its sales will grow again next year even as challenges in the U.S. and Chinese markets persist, after reporting an annual 1% drop largely in line with forecasts and its own guidance.
The world's No.2 Western spirits maker and its rivals have suffered as a post-pandemic boom in expensive spirits sales has reversed amid high interest rates, inflation and economic challenges in China, the number one market for alcoholic drinks.
The maker of Absolut vodka and Jameson whiskey in particular has felt the pressure as retailers and wholesalers in the United States cut back on pricier spirits stock. Sales have also been slow in China, where a troubled economy hurt consumer confidence.
Net sales for the reporting year ending in June declined by 9% and 10% in those markets respectively, and Pernod said it expected a "soft" first quarter of 2025, with further U.S. inventory adjustments and a "very weak macro context in China".
Elsewhere, however, it said it expected a good performance and that continued volume recovery would help bring net sales back into positive territory.
"The key message is back to growth," Chairman and Chief Executive Officer Alexandre Ricard told Reuters in an interview. He said consumer sentiment remained volatile but was resilient in many markets.
Its shares rose slightly in early trading, but later surged as much as 8% on news that China's Commerce Ministry had decided not to impose provisional tariffs on brandy imported from the European Union.
They stood 3.37% higher at 0834 GMT.
Top spirits maker Diageo DGE.L dragged shares across the sector down in July when it set a gloomy outlook for next year, saying it was difficult to call when the consumer environment and net sales would improve.
Both Diageo and Pernod, however, say they are confident they can ultimately return to far higher growth rates - ambitions some analysts see as overly optimistic given challenges facing the industry.
Ricard declined to be drawn on when Pernod may reach its goal of organic net sales growth closer to 7%, but said it was "not a long-term" time horizon.
Investors, such as Charles de Riedmatten, fund manager at Myria AM, however are also sceptical.
"I don't know why they stick to this," he said. De Riedmatten pointed out that Pernod rarely achieved such growth before the pandemic and lower, more credible guidance would boost shares long-term.
Pernod's 1% decline in 2024 organic net sales was just ahead of the 1.2% drop anticipated by analysts. Profit from recurring operations was well ahead of estimates, up 1.5%.
Reporting by Emma Rumney in London; Editing by Lincoln Feast and Tomasz Janowski
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
