French spirits group Pernod Ricard – which owns Jameson whiskey - has posted a flat first-half operating profit as a crackdown on extravagant spending in China and a struggling US vodka market held back earnings.
The world's second-biggest spirits group nevertheless said sales were gradually improving despite a still challenging economic climate, and it kept its annual profit growth outlook.
In China, the group's second-largest market, sales still fell 16% in the first half and the upcoming Chinese New Year that starts on 19 February will be key to confirming an "improving underlying trend", the group said.
"Excellence in execution in every market will be key to win the battle of top-line growth," said new chairman and CEO Alexandre Ricard in a statement.
Mr Ricard became head of Pernod Ricard at a board meeting yesterday, putting the founding family back in charge at a time when growth in the two key markets of China and the US has slowed.
First-half sales reached €4.621bn, an underlying rise of 1%, while underlying operating profit was flat at €1.358bn.
This was broadly in line with analysts' expectations of 4.658 billion euros in sales and 1.382 billion in operating profit in a company-compiled consensus.
The owner of Absolut vodka, Martell cognac as well as Jameson said it still eyed a rise of between 1% and 3% in underlying operating profit for the year ending 30 June 2015.
Pernod Ricard relies in Asia for about 38% of its sales and 43% of its operating profit.
It makes 12% of its sales in China, its second-biggest market behind the US, but like rivals Diageo and Remy Cointreau it has been hit by a Chinese government crackdown on luxury gift-giving and personal spending by civil servants, as well as slowing economic growth in the world's second-biggest economy.
Net debt also increased by €681m to €9.034bn, mechanically impacted by a stronger dollar against the euro as 57% of gross debt is in dollar.
Pernod Ricard shares have gained 16% so far this year, outperforming a 10% gain in the European sector.
