Pernod Ricard Full-year Profit Falls As Coronavirus Hit Sales

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French spirits maker Pernod Ricard said it has written off 1 billion euros ($1.19 billion) in the full financial year 2019/20, as the shutdown of bars and restaurants in most of its markets due to the pandemic hit the company's sales and profit.

PARIS: French spirits maker Pernod Ricard said it has written off 1 billion euros ($1.19 billion) in the full financial year 2019/20, as the shutdown of bars and restaurants in most of its markets due to the pandemic hit the company’s sales and profit.

For the year ahead, the owner of Mumm champagne, Absolut vodka and Martell cognac, predicted a prolonged downturn in travel retail but sees resilience in sales to supermarkets in the United States and Europe and a sequential improvement in China and India.

“For 2021 Pernod Ricard expects continued uncertainty and volatility, in particular relating to sanitary conditions and their impact on social gatherings, as well as challenging economic conditions” Chairman and CEO Alexandre Ricard said in a statement.

Pernod Ricard, the world’s largest spirits maker after Diageo, said profit from recurring operations fell 13.7% on an organic basis to 2.260 billion euros ($2.69 billion) in the year ended June 30.

This compared with the company’s July revised guidance for a 15% decline.

The resilient performance reflected tight cost control and better-than-expected spirits sales to supermarkets in the United States and Europe during the fourth quarter.

Pernod Ricard’s 1 billion euro impairment charge mostly related to Absolut vodka follows those of other alcoholic beverage makers, Diageo, AB InBev and Heineken. It led to a 77% fall in net profit to 329 million euros in the full year.

Over the twelve months to June 30, sales fell 9.5% to 8.448 billion euros, reflecting notably a 27% fall in global travel retail sales and a 16% fall in China sales.

In China, which makes 9% of group sales and is the group’s second largest market after the United States, the closure of bars and restaurants from January hit Chivas Regal and Martell cognac sales. Trends were, however, improving in the fourth quarter from the third quarter with the gradual reopening of bars and restaurants.

($1 = 0.8401 euros)

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