French spirits maker Pernod Ricard said it has written off €1 billion in the full financial year 2019/20, as the shutdown of bars and restaurants in most of its markets due to the pandemic hit the company's sales and profit.
For the year ahead, the owner of Mumm champagne, Absolut vodka and Martell cognac predicts a prolonged downturn in travel retail but sees resilience in sales to supermarkets in the United States and Europe and a sequential improvement in China and India.
Pernod Ricard, the world's largest spirits maker after Diageo, said profit from recurring operations fell 13.7% on an organic basis to €2.260 billion euros in the year ended June 30.
This compared with the company's July revised guidance for a 15% decline.
Cost Control
The resilient performance reflected tight cost control and better-than-expected spirits sales to supermarkets in the United States and Europe during the fourth quarter.
“The group has proven very resilient through FY20 and demonstrated its agility and ability to keep its supply chains operational, control costs and manage cash," commented Alexandre Ricard, chairman and chief executive. "I would like to take this opportunity to praise the exceptional commitment of our teams during this difficult time."
In Europe, sales for the full year were down 6%, with 'good resilience' in Germany, the UK and Eastern Europe. This partially offset declines in Travel Retail, Spain and France.
In its Americas region, sales were down 6% in the full year, while Asia-Rest of World was down 14%.
Looking Ahead
Looking ahead to the coming year, Pernod Ricard said that it expects "continued uncertainty and volatility, in particular relating to sanitary conditions and their impact on social gatherings, as well as challenging economic conditions," Ricard added.
"We will harness our agility to adjust fast to capture new opportunities. Thanks to our solid fundamentals, our teams and our brand portfolio, I am confident that Pernod Ricard will emerge from this crisis stronger.”
News by Reuters, additional reporting by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
