French spirits maker Pernod Ricard, which is being targeted by activist investor Elliott, today posted a 1.3% rise in first-quarter underlying sales, reflecting slower growth rates in China and India.
In August Pernod, the world's second-biggest spirits group behind Diageo, indicated it expected a relatively soft first quarter, citing a very high year-ago comparison basis in Asia.
For its first fiscal quarter to the end of September, Pernod reported sales of €2.483 billion, marking a like-for-like rise of 1.3%. This compared with a growth rate of 10.4% the same time last year.
The owner of Jameson Irish whiskey, Mumm champagne, Absolut vodka and Martell cognac said that despite an uncertain environment, it was keeping its forecast for a 5-7% organic rise in full-year profit from recurring operations after last year's 8.7% growth.
In the first quarter alone, sales growth reached 6% in China compared to 27% the same time last year, reflecting notably a decline in Chivas sales due to challenging market conditions.
Martell cognac sales in China benefited from a price rise but sustainable inventory management weighed on volumes, Pernod said.
Its US arm fared better and made a good start, delivering 6% sales growth in the first quarter.
Pernod Ricard, which owns Irish Distillers, is under pressure from US hedge fund Elliott, which has a 2.5% stake, to improve profit margins and corporate governance.
In February, Pernod vowed to lift its margins and shareholder returns under a three-year strategic plan that Elliott has described as a first small step.
Earlier this month, Pernod Ricard said it would cut about 280 jobs through a voluntary redundancy programme as part of a plan to merge its two French distribution subsidiaries Ricard and Pernod.
The company also said it would sell the Cafe de Paris sparkling wine brand and its Cubzac production site to InVivo Wine.
