Pernod posts double-digit profit loss28th August, 2014 by Lucy Shaw
Drinks giant Pernod Ricard today revealed a double-digit decline in net profit in its full-year results fuelled by a 23% drop in sales in China.
Net sales for the group, which owns Absolut, Jacob’s Creek, Beefeater, Havana Club and Champagne Mumm among other brands, were down by 7% to €7.9 billion.
Net profit meanwhile saw a double-digit dip – down 14% to €1.02b, with a clampdown on gift giving in China under the government’s new austerity measures contributing to the drop.
In terms of world markets, net sales in Europe were down by 2%, while the Americas saw an 8% drop in sales and Asia/ROW a larger decline of 12%.
As for individual brands, wine fared better than spirits with Champagne brand Perrier-Jouët enjoying a 16% rise in net sales and Rioja stalwart Campo Viejo seeing a 10% growth in net sales.
On the spirits front, Irish whisky Jameson remained out in front with a 12% rise in net sales, while fellow whisky brands Chivas Regal saw net sales fall by 4%, Ballantine’s by 5% and Royal Salute 8%.
The most dramatic drop in net sales however came from Cognac brand Martell, which dipped by 9% due to China’s aforementioned austerity measures.
Addressing the results, Pernod’s deputy CEO Alexandre Ricard said: “In this context which will remain challenging, we anticipate a gradual improvement in our sales growth.
“We will increase the investment behind our brands and priority innovations in order to sustain long-term growth.”
The company’s CEO, Pierre Pringuet, highlighted his commitment to the cost-cutting project Allegro, which aims to free up €150 million of savings over the next three years for the company.
“We are seriously committed to the Allegro project: this operational efficiency project must enable us to maximise our future growth while generating a hard figure of €150 million of savings,” Pringuet said.
As part of project Allegro, the company has reorganised its French distribution units, leading to 60 job losses.