Pernod Ricard now expects flat full-year sales after tough first half By Reuters

PARIS (Reuters) -French spirits maker Pernod Ricard (EPA:) said on Thursday it now expected sales to flatline this year after a tough first six months, but is banking on improved demand in key Chinese and U.S. markets from the second half.

Pernod Ricard, which owns Martell cognac, Mumm champagne and Absolut vodka and had previously forecast a rise in annual sales, said strict control over costs would however drive margin expansion, with full-year organic operating profit set to grow at a low single-digit rate.

The world’s second-largest spirits maker after Diageo (LON:) said it would buy back 300 million euros worth of shares this year, having already repurchased 150 million euros of stock in the first half.

Profit from current operations in the first six months of its fiscal year to Dec. 31 reached 2.144 billion euros ($2.30 billion), an organic decline of 3%, but slightly better than analysts’ expectations of a 5.1% decline.

Sales at Pernod amounted to 6.59 billion euros in the first half, down 3% organically and on par with analysts’ expectations as an economic slowdown in China dampened demand while inventory adjustments in the United States continued after a post-COVID surge.

In China, where sales fell 9% in the first half, Pernod said sentiment remained “cautious” ahead of the Lunar New Year.

Pernod Ricard, like rivals Diageo or Remy Cointreau, has seen strong growth over the past two years with sales lifted by home consumption during COVID and price increases.