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October 25, 2012 2:44 pm
Pernod Ricard, the world’s second-biggest distiller by sales, became the latest company to feel the pain of slowing growth in China, warning of the country’s “less favourable macro-economic backdrop”.
The Chinese thirst for Scotch whisky has fuelled a boom in sales, as well as investment and jobs in Scotland.
However, Pernod, unveiling a 5 per cent year-on-year rise in organic sales for the three months to end-September, warned that sales were slowing down in China, Korea and Thailand.
Earlier this month, Diageo, the world’s biggest distiller by revenues, reported a slowdown in sales in Asia, partly due to technical issues, while Rémy Cointreau said Asian wholesalers were holding back on new cognac orders.
In another sign of slowing Asian demand for high-end goods, luxury handbag maker Mulberry warned this week that annual pre-tax profit would decline after it was hit by cautious wholesale buying in Asia.
Consumer goods companies had until recently shrugged off the deceleration in Chinese economic growth, saying that even at 7 or 8 per cent, growth is still vastly superior to Europe and the US.
Pernod said western European sales fell 6 per cent in the period, with the worst slump of 8 per cent occurring in the distiller’s home market of France. This partly reflected the impact of a rise in excise duty on January 1.
Consolidated net sales, which are before taxes and duties, were €2.2bn for the period, compared with €1.99bn last year.
Martin Deboo, analyst at Investec Securities, said there was “quite a change of tone” from the company about the challenges and the economic backdrop compared with the previous year.
Chivas Regal, one of the company’s most important brands accounting for about 10 per cent of group sales, saw zero growth after the 6 per cent gains from price increases were all lost in volume.
But Pierre Pringuet, chief executive, described it as a good overall performance. Pernod is aiming for organic profit growth of close to 6 per cent this year, compared with 9 per cent last year.
Shares in Pernod, which have risen by nearly a third in the last year and outperformed peers, fell 0.3 per cent on Thursday to €84.33.
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