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China, U.S. Weigh Down Pernod Ricard’s Sales, Profits As Alex Ricard Takes Helm

February 12, 2015

New Pernod Ricard CEO Alex Ricard is taking the helm at a time when the company’s struggles in two key markets—the U.S. and China—are weighing down sales and profits. Pernod Ricard’s sales rose by a modest 1% to €4.62 billion ($5.25b) in the first half of its fiscal year (ended December 31, 2014), while its operating profit remained flat at €1.36 billion ($1.55b) and net profit fell by 5% to €795 million ($904m).

Pernod Ricard said conditions in China were gradually improving, but that sales there continued to decline amid the government’s austerity campaign. The Paris-based drinks giant also cited a “challenging business environment” in the U.S. that thwarted sales growth. The company’s sales were stable in Asia/Rest of World (accounting for 39% of overall sales), as solid growth in India, Africa and travel retail essentially offset the softness in China. Likewise, Pernod Ricard’s strong performance in Brazil largely offset the 2% decline in the U.S. as the group carved out a 2% sales gain in the Americas (27% of overall sales). Sales were flat in Europe (34% of overall sales), as a slowdown in Eastern Europe and Germany was mitigated by improving results in Spain and the U.K.

Pernod Ricard’s 14 priority spirits and wine brands had flat net sales for the six-month period, as their 2% aggregate volume gain was negated by a negative price mix. Key brands like Absolut, Chivas Regal, Ricard, Havana Club, Malibu and Martell showed little or no sales growth. However, Jameson and The Glenlivet both came through with double-digit gains, while Ballantine’s, Beefeater and Kahlúa also achieved solid progress, as did the company’s Mumm and Perrier-Jouët Champagnes.

Alex Ricard was officially appointed chairman and CEO of Pernod Ricard earlier today, following the retirement of longtime chief executive Pierre Pringuet (Ricard is also replacing chairwoman Danièle Ricard in his new role). Ricard, who has spent the past few years as the company’s deputy CEO and chief operating officer, is the grandson of Paul Ricard, who created the Ricard pastis brand and the company that eventually became Pernod Ricard.

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