A look at what will happen next in the world economies
Monday, June 13, 2016
Pernod Ricard Sales Slip With Slack China Demand Offsetting U.S. Growth
Slow downs in the Chinese market have ripple effects everywhere. Aivars Lode
Fiscal third-quarter revenue fell 3% to €1.86 billion
By Nick Kostov
PARIS—French liquor group Pernod Ricard SA said fiscal third-quarter sales declined 3%, with currency volatility and weak demand in China, partly reflecting an earlier Lunar New Year, offsetting a strong performance in the U.S.
Pernod, which is the world’s second-largest liquor distiller, said on Thursday that revenue fell to €1.86 billion ($2.10 billion) in the three months to end-March. The family-controlled company produces various spirits including Jameson’s whiskey, Absolut vodka and Martell cognac.
The revenue decline highlights how the company has yet to gather enough sales growth in the U.S. to compensate for shrinking demand in China and the euro’s strength against emerging-market currencies, ensuring that sales abroad don’t convert into as much of the group’s home currency as they used to.
Organic revenue, a measure which strips out currency effects, rose 1% from the same period last year, the company said.
Sales have declined steadily in China, where the government’s anticorruption campaign has sapped spending on luxuries such as expensive liquor.
Pernod Chairman and CEO Alexandre Ricard said the company was working to develop the next phase of growth in China and remains “confident in the medium term potential despite the tough current context.”
Sales in its Americas region, dominated by the U.S. market, rose 5% in the quarter, while its operations in Asia and the rest of the world increased dropped 10%. Sales in Pernod’s home region of Europe were flat.