Absolut Writedown Hurts Pernod’s Profits, But Company Carves Out 2% Sales Growth

Pernod Ricard achieved 2% organic sales growth in its recently ended fiscal year (positive currency exchange impact pushed reported sales to +8%), but its flagship Absolut vodka brand is weighing down the French drinks giant. Pernod’s net profit fell 15% to €861 million ($964m) in the 12 months ended June 30, 2015, as the company’s bottom line was hurt by the €652 million ($730m) writedown it was forced to take on struggling Absolut.

Absolut has been hit hardest in the U.S., its largest market by far. The iconic vodka brand’s sales fell by 5% in the U.S., while stronger results outside the market left its overall sales down just 1% as its global volume remained flat.

Absolut’s U.S. slide offset impressive solid gains by Jameson (sales up 18%), The Glenlivet (+11%), Malibu (+3%), Martell (+20%) and the company’s fast-rising Tequila entries—Avión (+36%) and Olmeca Altos (+101%). Pernod’s overall U.S. sales were flat, although the company was on the rise in the second half of its fiscal year, with its U.S. sales up by 3%.

Elsewhere, a strong Chinese New Year celebration buttressed Pernod’s sales in the key China market, where sales were down by just 2% following a 23% drop in the company’s previous fiscal year.

Meanwhile, Pernod continues its upswing in India (sales up 18%), where its local whisky offerings—led by Royal Stag—have enjoyed years of double-digit growth, even as the overall Indian Made Foreign Liquor (IMFL) segment has slowed down markedly of late.

Tagged : Absolut, Jameson, Pernod Ricard, spirits

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