Pernod Ricard sees profit fall as Chinese officials clamp down on expensive giftsThursday 28 August 2014 08.52
Pernod Ricard has reported a 14% decline in net profit in the year to the end of June, as sales declined and currency movements had a negative impact on its bottom line.
The wine and spirits producer - which includes Jameson, Cork Dry Gin and Chivas Regal among its brands - recorded a net profit of €1.03bn in the year, compared to €1.19bn in 2012-13.
This was on the back of a 7% fall in net sales at €7.95bn, which the company said was entirely due to a 23% fall in the Chinese market.
Rules introduced by China to tackle corruption and over-spending have all but ended the practice of gift-giving amongst government officials, which has had a heavy impact on makers of premium drinks.
Pernod Ricard has reported growth in all of its other markets, however, with both Europe and the Americas gaining by 2% and the rest of Asia up by 5%.
However the impact of foreign exchange was “highly unfavourable”, the group said, hitting its profit from recurring operations by €199m.
Net sales of Jameson were 12% higher during the year, with 4.7m nine-litre cases sold, making it the company’s fifth highest selling spirit.