Thursday, August 28 08:38:39
French spirits maker Pernod Ricard said it expects sales to gradually improve in a still challenging economic climate, notably in its key Chinese market, and vowed to push ahead with cost savings it plans to partly reinvest to support its brands and long-term growth.
The world's second-biggest spirits group behind Britain's Diageo reported full-year underlying profit growth of 2 percent on Thursday, broadly in line with analysts' average estimate of 1.8 percent.
Pernod, the owner of Mumm champagne, Absolut vodka and Martell cognac, tied the performance to strict cost control as full-year 2013/14 sales fell a reported 7 percent, hit by unfavourable currency effects and a 23 percent slump in China.
Like-for-like sales were stable.
For the fourth quarter alone, group sales fell 2 percent like-for-like, after being flat in the previous three months.
"In this context, which remains challenging, we anticipate a gradual improvement in our sales growth, and we will increase the investment behind our brands and priority innovations in order to sustain long-term growth," Deputy Chief Executive and Chief Operating Officer Alexandre Ricard said in a statement.
Pernod will also push ahead with its already announced Allegro plan to improve operational efficiency and save an annual 150 million euros over three years, CEO Pierre Pringuet said. Proceeds would be partly reinvested to support brand development.
Pernod Ricard makes 12 percent of sales and 15 percent of profit in China. Asia accounts for around 40 percent of its sales and 46 percent of profit.
Like rivals Diageo and Remy Cointreau, Pernod has been hit by a Chinese government crackdown on luxury gift-giving and personal spending by civil servants as well as by slowing economic growth in its second-biggest market.
Pernod said underlying profit was 2.056 billion euros in its financial year ending June 30.
This was also in line with Pernod's guidance for underlying operating profit growth of 1 to 3 percent, slowing from 6 percent growth in the previous year. (Reuters)
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