Pernod Ricard Reports Improved Sales During Chinese New YearMatthew Boyle
Pernod Ricard SA, the French maker of Martell cognac, said sales during the critical Chinese New Year holiday improved over last year and signalled that the slowdown caused by anti-graft regulations is easing.
Pernod’s sales volume during Chinese New Year rose 7 percent, an acceleration compared with the 1 percent uptick since the fiscal year began in July, the distiller said in slides accompanying an investor presentation on its Asian business Thursday. Martell volume increased 13 percent during the weeklong period, compared with the 5 percent year-to-date gain, while whisky sales fell 6 percent.
The performance in a market that accounts for about 15 percent of the company’s profit was “better than we and the market expected,” Jason Derise, an analyst at UBS Group AG, said in a note. An improvement in the value of those festive-period sales, which was not disclosed in the slides, “would help convince the market that the worst is in the past.”
Pernod shares rose as much as 2.8 percent to 109.5 euros, and traded at 106.7 euros as of 10:25 a.m. in Paris.
Like other distillers including Diageo Plc and Remy Cointreau SA, Pernod has suffered from the Chinese government’s crackdown on lavish spending. In response, the Paris-based distiller has introduced lower-priced cognacs to China, which have sold well yet generate narrower profit margins. Pernod’s first-half sales in China declined 6 percent, excluding the timing effect of the holiday falling later this year.
Pernod said that China “is still challenging” and headwinds remain, as the anti-graft campaign is still being enforced and the broader economy has slowed. Total imported spirit sales rose 3 percent during Chinese New Year, Pernod said in the presentation, compared with a 3 percent drop so far in its fiscal year.
The company also maintained its forecast for a 1 percent to 3 percent increase in full-year earnings.