Jameson-owner sees demand slump in US and China

Sales fell 5.9% in the first half of the year, more than the 5.7% drop forecast by analysts

Jameson is owned by Pernod Ricard, which also makes Powers Irish whiskey. 

Jameson-owner Pernod Ricard posted disappointing sales in the first half, weighed down by a prolonged slump in demand for spirits in the US and China.

Organic sales fell 5.9% in the first half of the year, the French Cognac maker said on Thursday, more than the 5.7% drop forecast by analysts. It was also impacted by an unfavorable currency environment.

Even so, Pernod said a further headcount reduction helped it cut costs by 10% in the period, and the company reiterated it expected sales to improve in most markets in the second half. That was a positive sign, given expectations of a guidance change, JP Morgan analysts said in a note.

Pernod’s shares rose as much as 4.1% in Paris, before paring back to little change. They were down 16% over the past 12 months.

Though it did not specify how many roles were cut in recent months, Pernod said its overall headcount stood at about 18,200, down from 20,600 two years ago.

“Right now the environment is not the most pleasant,” chief executive Alexandre Ricard, whose grandfather founded the distiller, told analysts. “At the end of the day, life is not designed to be easy.” 

The maker of Absolut vodka and Royal Salute whiskey was among the first to be hit by global trade tensions after Beijing suspended duty-free Cognac sales last year in retaliation against the European Union’s tariffs on Chinese electric vehicles. Pernod also faces US tariffs on its exports from the EU and the UK.

The company said premium brands such as Jameson and Absolut are experiencing good growth in the US and China; however, growth across Europe is more modest.

Shares in drinks makers, including Pernod and Remy Cointreau, fell last week after a post from a Weibo account affiliated with China Central Television raised fears of a renewed trade dispute between France and China.

The post said Beijing could consider launching new anti-dumping and anti-subsidy investigations into the EU, focused on French wine, or impose reciprocal tariffs if France pushes the bloc to impose 30% levies on China.

Pernod saw a negative foreign exchange impact of €56m the latest period, primarily driven by fluctuations in the dollar, Indian rupee, and Turkish lira.

Bloomberg