French spirits maker Pernod Ricard said it expected to grow sales over the coming year, despite a difficult first quarter marred by big drops in sales in the United States and China.
Pernod, which hopes to one day overtake rival Diageo to become the world's top spirits maker, had already flagged a decline in first quarter sales, which dropped 2% overall.
Pernod struggled as a tough economy in China dampened demand and amid inventory adjustments in the United States, where sales are also normalising after a post-COVID surge.
Chief executive Alexandre Ricard said things would improve over the course of the year, with Pernod flagging a positive outlook in its four "must-win" markets - the United States, China, India and global travel retail.
"I am confident that we can deliver broad-based and diversified sales growth in FY24," Ricard said in a statement.
Easing inflationary pressures and cost control would help operating margin expansion in the full year, Pernod said.
Quarterly Highlights
The maker of Absolut Vodka, Martell cognac and Mumm champagne reported sales of €3.04 billion ($3.20 billion) from July to September, a like-for-like decline of 2%.
That was slightly better than an analyst consensus for a 2.6% drop, though some said its performance in regions like the Americas was behind expectations.
But with Pernod's first-quarter decline well communicated, the focus was on its US and China commentary.
"The big uncertainty is just around China," said Bernstein analyst Trevor Stirling, adding that Pernod's performance would likely improve compared to even weaker sales last year, when COVID-19 was still a factor.
But, he continued, it's not clear to what degree there will have been improvement in the economic environment hurting Pernod's performance right now.
Pernod's chief financial officer Helene de Tissot told Reuters by phone that Pernod saw an improvement in consumption in China in September with cognac sales stabilising, though it was too early to say if this was a lasting trend.
