Pernod Ricard says sales likely to suffer during second wave

PARIS (Reuters) - French spirits maker Pernod Ricard PERP.PA doesn't expect sales to rise until next year as second-wave COVID-19 lockdowns are likely to hit its business heavily in the last three months of 2020, the company said on Thursday.

Pernod, the world's second-biggest spirits company behind Diageo DGE.L, said sales rebounded in the three months to Sept. 30 after a torrid previous quarter but were still down 6% from a year earlier at 2.236 billion euros ($2.7 billion).

“We expect a second quarter that will be heavily impacted by the COVID crisis. There is a second wave of infections in Europe and new restrictions in France, even lockdowns in Ireland, Britain,” Chief Executive Alexandre Ricard told Reuters.

Pernod’s fiscal year starts on July 1. While down from a year earlier, its first-quarter sales beat analyst expectations for a 13% drop and were a marked improvement on a 36.2 % slump in the three months to June 30 as strict lockdowns kicked in.

Shares in Pernod, which makes drinks such as Absolut Vodka, Mumm champagne and Martell cognac, were 2.9% higher at 0840 GMT.

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Like its rivals, Pernod has been hit hard by the pandemic, which has led to closures of bars, restaurants and night clubs in many countries and worldwide travel restrictions. When venues have reopened, strict social distancing, early closing times and reduced capacity have all kept a lid on sales.

Ricard also said duty-free sales would not recover during the company’s current financial year due to continued travel restrictions and were likely to show a double-digit decline.

Travel retail sales, which make 6% of group sales, fell 64% in the three months to Sept. 30.

In China, which contributes 9% of Pernod’s sales and is its second largest market after the United States, sales rose 4% in the quarter, helped by the reopening of bars and restaurants and strong demand ahead of the country’s Mid-Autumn festival.

About 90% of China’s bars, restaurants and clubs had reopened and while business was not yet back to pre-pandemic levels, customers were prepared to spend more, Ricard told Reuters.

U.S. sales rose 6%, also benefiting from good orders ahead of the festive season and strong consumption in homes.

Smaller rival Remy Cointreau RCOP.PA also posted better-than-expected sales in its second quarter and said it was confident the United States and China would fuel a strong rebound its second half.

Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta, Rashmi Aich and David Clarke