Pernod Ricard cut its annual operating profit goal blaming the coronavirus outbreak in China.
Profit from recurring operations was €1.8bn, up 4.3 per cent on an organic basis, slightly ahead of the 1.7bn expected by Citi analysts.
Pernod Ricard’s revenue in the second quarter rose to 2.9bn, an organic sales growth of 3.8 per cent.
Sales for the first half of 2019 totalled €5.5bn with organic growth of 2.7 per cent and reported growth of 5.6 per cent.
Why it’s interesting
Pernod Ricard’s strongest market was China with an 11 per cent increase in sales. It said that its operating profit from recurring operations would grow between 2 to 4 per cent this year, down from the 5 to 7 per cent it earlier predicted.
What Pernod Ricard said
Chairman and chief executive Alexandre Ricard said:
“H1 FY20 demonstrated solid growth and resilience of our business model. Our 3 year-plan Transform& Accelerate is driving success, as evidenced by the diversification of the sources of growth in terms of geographic footprint and categories, continued strong pricing and ultimately the improvement in operating leverage.
Looking to H2 FY20, the environment remains particularly uncertain from a geopolitical standpoint, with the additional pressure related to the COVID-19 outbreak. While we cannot currently predict the duration and extent of the impact, we remain confident in our strategy. Our first priority is to ensure the safety and wellbeing of our employees and business partners. I would like to praise the exemplary behaviour of our teams during this difficult time. We fully support their efforts, as well as those of the Chinese people and authorities to contain the epidemic.
Assuming a severe impact of COVID-19, mainly on Q3 FY20, we are at this stage providing a guidance of organic growth in Profit from Recurring Operations for full-year FY20 of +2% to +4% and will continue to closely monitor our environment. We will stay the strategic course and maintain priority investments in order to continue maximising long- term value creation.”