Pernod Ricard warns weak US, China will weigh in years to come

Pernod Ricard warns weak US, China will weigh in years to come

PARIS/LONDON, Aug 27 (Reuters) – Pernod Ricard on Thursday reported steep sales declines in the U.S. and China and said it was aiming for only the lower end of its sales target range until 2029, as spirits makers battle to revive demand in their major markets.

The French wine and ​spirits group, which tried to merge with Jack Daniel’s maker Brown-Forman earlier this year but talks collapsed, ​was also hit by a disruption to tourism from a prolonged conflict in the Middle ⁠East. It reported a worse-than-expected 3.9% drop in annual organic sales – its third consecutive decline.

Recovery prospects for its ​current fiscal year, which started July 1, look muted. Pernod, the second-largest spirits maker behind Diageo predicted organic net ​sales to be broadly stable, with the U.S. and Chinese still challenged in the first quarter.

CEO Alexandre Ricard said the company does not see the U.S. returning to growth until after 2029, in line with expectations from Diageo, driving Pernod’s forecast for sales growth ​only at the lower end of its 3% to 6% range until that year.

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“The assumptions that drive that kind ​of outlook are based on a U.S. market which is not in growth over that period and which is quite soft,” ‌Ricard told ⁠Reuters in an interview.

However, Pernod’s broader geographic reach will bolster its performance in the coming years, he said.

Shares in the maker of Martell cognac and Absolut vodka fell over 2% in early trade.

DEEP SALES DECLINES IN US, CHINA

Despite a “grim” performance in key markets like China, Pernod’s results were “just about ok”, James Edwardes Jones, analyst at RBC Capital ​Markets, said. Jones said the ​upper end of its ⁠sales growth range was an unrealistic goal anyway.

All spirits companies are battling a multi-year slump in sales that has prompted valuations to slide, CEOs to exit and companies to ​sell assets and cut costs.

In the key U.S. and Chinese markets, Pernod sales dropped ​14% and 19% ⁠respectively amid tariff threats and difficult economic conditions, such as soaring costs of living, that have dented consumer confidence.

Group annual sales were just short of the 3.7% contraction expected by analysts, but profit from recurring operations fell 5.2%, slightly less ⁠than ​expected.

Pernod kept its 2026 dividend stable at €4.70 per share. Ricard said it ​expects to complete an aggressive, €1 billion restructuring programme a year ahead of schedule, and had cut around 3,600 jobs since its 2024 financial ​year.

($1 = 0.8580 euros)