By Andrea Figueras

 

Pernod Ricard cut its sales guidance for fiscal 2024 and reduced the size of its share buyback after first-half sales fell, dragged by lower volumes.

The French distiller on Thursday said it now expects broadly stable organic net sales in 2024, while it previously anticipated broad-based and diversified organic net sales growth.

The maker of Absolut vodka and Martell cognac booked sales of 6.59 billion euros ($7.07 billion) for the six months to Dec. 31, an organic decline of 3% compared with the year-ago period, but in line with analysts' expectations according to Visible Alpha consensus.

Sales in the Americas declined by 7% due to a weak performance in Canada and high stock levels in the U.S.

After positive trends during the pandemic, drinks makers are grappling with more normalized growth environment, leading to high inventories particularly in the U.S.

In Asia and rest-of-the-world region, Pernod Ricard saw a 1% increase in sales, though a poor performance in China led to a 9% drop in sales.

The company said the decline in China was due to a softened consumer demand in a challenging macroeconomic environment. However, it didn't mention effects regarding the anti-dumping investigation that the Chinese government launched in January on brandy imported from the European Union, which was seen as a potential hit to the performance of drinks makers.

Net profit slipped to EUR1.57 billion from EUR1.79 billion previously, ahead of analysts' projections of EUR1.45 billion, according to a Visible Alpha poll of estimates.

"We delivered a robust performance in the first half of the year, as we confidently steer Pernod Ricard through the normalization of the spirits market, following two years of outstanding growth," Chairman and Chief Executive Alexandre Ricard said.

Pernod Ricard plans to buy back shares valued at EUR300 million for the year, with around half of that volume completed in the first half. It previously said buybacks would amount to between EUR500 million and EUR800 million.

Despite its lowered 2024 sales view, the company backed its medium-term financial targets, including reaching the upper end of between 4% and 7% of net sales growth and organic operating leverage of 50 to 60 basis points.

 

Write to Andrea Figueras at andrea.figueras@wsj.com

 

(END) Dow Jones Newswires

02-15-24 0327ET