Pernod sees profit growth slowing as Asia cools
PARIS (Reuters) - Pernod Ricard (PERP.PA) predicted a slowdown in profit growth in the current year after easing Asian demand for Martell cognac and Scotch whiskies dragged quarterly sales below forecasts.
Pernod is the latest spirits company to say it faced slowing growth in Asia, after recent updates from rivals Diageo (DGE.L) and Remy Cointreau (RCOP.PA) stoked fears that weaker economic growth in the region was cooling demand for premium spirits.
The world's second-biggest spirits group behind Britain's Diageo predicted a rise in underlying profit from recurring operations of close to 6 percent in the year to June 30, 2013, a slowdown from 9 percent in fiscal 2012.
Chief Executive Pierre Pringuet said on Thursday he expected the full year to follow the trend seen in Pernod's first quarter through September.
"We are expecting neither a deterioration nor an improvement from the market trends seen in the first quarter," Pringuet said.
The owner of Absolut vodka and Mumm champagne reported a 5 percent rise in underlying first-quarter sales, against an average forecast of 6.2 percent from 10 analysts polled by Reuters, and said demand was more moderate in Asia though still strong, while the United States showed good momentum.
Falling sales in austerity-hit southern Europe, notably Spain, also weighed on quarterly sales.
Asia-Pacific accounts for 39 percent of group sales against 26 percent for America and 26 percent for Europe, excluding France.
Pernod also said second-quarter underlying sales growth would suffer from unfavorable comparisons with the year-ago quarter, which was boosted by French buying ahead of an excise duty hike and an early Chinese New Year.
Pernod shares opened down 1.3 percent but quickly moved back into positive territory to trade up 0.5 percent to 85 euros by 0733 GMT (0433 EDT), as analysts took the company's a traditionally conservative outlook in their stride.
"Consensus is currently looking for close to 9 percent (profit growth), which we think will probably move towards our estimate of 7.5 percent given uncertainty on European, French and Asian growth," Jefferies analysts said in a note.
Pernod shares have gained 18 percent this year, outperforming the STOXX Europe 600 food and beverage index .SX3P, which has risen 16 percent.
Demand in China, Pernod's second-largest market after the United States and which accounts for roughly 13 percent of group sales, was hit by a slowing economy but remained "very dynamic", Pringuet told Reuters.
Recent updates from other spirits makers have pointed to a slowdown in Asia.
Remy Cointreau reported a sharp slowdown in sales growth in the last three months, saying Asian wholesalers were holding back on new cognac orders, while Diageo also said Asia Pacific trading had been hampered in the quarter.
Martell cognac remained Pernod's main growth driver, showing growth of 23 percent, followed by Indian whiskies. Scotch whiskies experienced a slowdown in Korea, China and Thailand. In China alone, Scotch whisky sales fell 1 percent.
Central and eastern European markets were strong, partially offsetting a 6 percent sales decline in western Europe. In Spain sales fell 5 percent, while France, which makes 9 percent of group sales, remained poor as sales fell 8 percent after excise duty increases.