China and currency effects drag Pernod Ricard sales below €8bn

By Kevin Rozario |

Drinks powerhouse Pernod Ricard has blamed the Chinese market and currency effects for a -7% decline in sales performance in fiscal 2014 (ending June) – while travel retail proved to be an encumbrance in the Americas with sales down in double digits.


Sales dropped to €7,945m ($10,480m) due to what the French company called “a highly unfavourable foreign exchange effect”. It also noted that “sales were adversely affected by one market, China” where sales were down by -23%. On an organic (comparable rate) basis total company sales were flat.


Among its three regions of Europe (now including France), Americas, and Asia/Rest of the World, each one posted sales declines of -2%, -8% and -12% respectively (see chart below and click to enlarge).


On an organic basis, Asia/RoW fell by -4% to €3,031m [although sales excluding China rose by +5%]; there was an improvement in Europe of +2% to €2,773m; but a slowdown of growth in the Americas to +2% due to the US and travel retail markets which resulted in sales of €2,142m.




Pernod Ricard’s Top 14 sales declined by -2% in fiscal 2014 due to a slight reduction in volumes (-1%) and an unfavourable mix (see chart below and click to enlarge).


Among the top volume brands, Absolut slipped -4% to 11.1m 9-litre cases; Ballantine’s was flat at 5.9m cases; and Chivas Regal fell -7% to 4.6m. Among the top five, Ricard grew +4% to 4.8m cases while Jameson had a very strong year, up +9% to 4.7m cases.


Volumes of luxury brands were hit: Martell, a key brand in China, was down by -6%; and Royal Salute by -7%. However, Pernod Ricard says that DF&TR had good growth from both brands.



The overall impact for Pernod Ricard was a reduction in profit from recurring operations of -8% to €2,056m and net profit declining by -14% to €1,027m (see chart below and click to enlarge).


Pierre Pringuet, CEO of Pernod Ricard has described the fiscal period as “more difficult than anticipated” and says: “We are seriously committed to the Allegro project: this operational efficiency project must enable us to maximise our future growth while generating a hard figure of €150m of savings.”


Alexandre Ricard, Deputy CEO & Chief Operating Officer, adds: “In this context which will remain challenging, we anticipate a gradual improvement in our sales growth, and we will increase the investment behind our brands and priority innovations in order to sustain long-term growth.”


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