Pernod Ricard sees profit fall as Chinese officials clamp down on expensive gifts

Thursday 28 August 2014 08.52
Jameson is the fifth largest selling spirit in Pernod Ricard's portfolio
Jameson is the fifth largest selling spirit in Pernod Ricard's portfolio

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.