French spirits maker Pernod Ricard said sales are likely to return to growth in the second half of its 2020/2021 fiscal year, although the downturn in travel retail and disruptions from the COVID-19 crisis will still impact its second quarter.
Pernod, the world's second-biggest spirits group behind Diageo, made the forecast after its first quarter sales sequentially improved, beating expectations and reflecting resilient home consumption in Europe and the United States amid the pandemic, and improving sales in China.
“Our first quarter is encouraging," commented Pernod Ricard chief executive Alexandre Ricard. "Sales were still in decline, but the business has recovered significantly vs. Q4 FY20, thanks to the partial reopening of the on-trade and the strong resilience of our brands in the off-trade.
"For FY21, we expect continued resilience of our business in an uncertain and disrupted environment."
He added Pernod would accelerate its digital transformation and tightly manage costs while maintaining the agility to reinvest to adjust to market opportunities.
Impact Of Pandemic
Pernod, which owns Martell cognac, Mumm champagne and Absolut vodka, has, along with its peers, been hurt by the pandemic, which has led to closures of bars, restaurants and nightclubs in many countries as well as travel restrictions.
When re-openings have been permitted, it has often been with strict social distancing, early closing and reduced capacity, while there have been signs of a resurgence of the virus in Europe.
For the first quarter ended 30 September, Pernod reported sales of €2.2 billion ($2.65 billion), marking a like-for-like decline of 6%, but also an improvement on a 36.2 % fall in the fourth quarter of its last fiscal year.
In China, which contributes 9% of group sales and is the group's second largest market after the United States, sales growth was 4%, helped by the reopening of bars and restaurants and strong shipments ahead of the Mid-Autumn celebrations.
In the United States, sales also advanced by 6%.