By Emma Rumney
LONDON (Reuters) -Pernod Ricard reported a 3% decline in third-quarter sales on Thursday, missing forecasts as tariff uncertainty in major markets the United States and China rocks the already-struggling spirits sector.
Analysts had expected Pernod, the world’s No. 2 Western spirits maker, which produces Jameson Irish whiskey and Mumm champagne, to report a 2% decline in organic net sales in the three months to end-March.
Pernod’s sales were boosted by U.S. wholesalers ordering ahead of expected tariffs.
But this was offset by other issues including a production interruption in India, the impact of tariffs on cognac sales in China, Pernod’s second-biggest market, and a 31% decline in its travel retail division due to the suspension of Chinese duty-free sales of cognac.
CEO Alexandre Ricard told Reuters that had it not been for a technical problem at a bottling plant in India and the late timing of Easter – neither of which will be factors in the next quarter – Pernod’s results would have been in line with expectations.
But analysts said issues like the timing of Easter were well flagged, and foreign exchange changes could impact Pernod’s earnings.
Chris Beckett, analyst at Pernod investor Quilter Cheviot, said things could have been worse, however, and there were some positive signs.
“There’s a lot of re-rating potential” if things improve, he said of the shares, which are historically cheap in large part due to tariff worries.
Pernod’s shares initially fell 1.5% on Thursday but rebounded to stand flat at 0947 GMT.
U.S. President Donald Trump’s efforts to rewrite global trade relationships have plunged the entire spirits sector into uncertainty.
The levies threaten consumer sentiment at a time when the appetite for pricey liquors is already under pressure due to high interest rates and inflation.
Ricard said Pernod had observed no change in underlying demand in the U.S., the company’s most important market, but it was unclear if that would change.
“It’s difficult to predict in today’s world,” he said.
Pernod maintained its guidance on annual sales and the impact of tariffs.
Most of its products are currently subject to a 10% U.S. tariff, but EU products like whiskies, cognac and champagne face a potential future 20% tariff. Trump has also previously threatened a 200% tariff on European alcohol.
($1 = 0.8804 euros)
(Reporting by Emma Rumney; Editing by Gerry Doyle, Savio D’Souza, Jan Harvey and Joe Bavier)
