‘Difficulties’ for Scotch in China fail to dent Pernod’s profit predictions

Sales of whisky in the previously surging Chinese market have declined. Picture: Getty

The group – which owns Paisley-based Chivas Brothers, Scotland’s second-largest distiller – still thinks profits can rise by 6 per cent in the year to 30 June, even after a slowdown in sales growth in China, Pernod’s second-biggest market after the United States.

Sales in the Asian economic powerhouse were hit by a crackdown by its government on luxury gifts. Pernod – which owns brands including Chivas Regal, The Glenlivet and Royal Salute – said the Chinese market presented “difficulties for Scotch”.

Arch-rival Diageo – Scotland’s largest distiller and the owner of the Bell’s, Johnnie Walker and Talisker brands – and figures from the Scotch Whisky Association trade body have also highlighted an easing of the rate of growth in China.

Investec analysts noted the key area in which Pernod missed market expectations was in its Asia and “rest of the world” region, where sales grew by just 2 per cent, compared with predictions for 6 per cent and an 11 per cent rise in the first half of the group’s financial year.

Yet Pernod is still optimistic on the outlook for its full financial year. Chief financial officer Gilles Bogaert said: “We should have like-for-like sales growth of between 9 and 11 per cent in China over the whole year.”

Chief executive Pierre Pringuet added: “Pernod Ricard’s business demonstrated good resilience in – as announced at the beginning of the year – a less-favourable economic environment.”

Global sales at Pernod – which also makes Absolut vodka, Beefeater gin and Jacob’s Creek wine – grew by 5 per cent in the first nine months of its financial year to €6.7 billion (£5.7bn). Those figures included revenues growing by 6 per cent in the third quarter to €1.7bn, compared with analysts’ expectations for a 7.3 per cent rise.

The third-quarter and year-to-date figures presented a mixed picture for whiskies, with a slowdown in growth masking some large gains. The Glenlivet single malt posted a 21 per cent jump in net sales in the opening nine months of the year.

The flagship Speyside malt grew its sales by 15 per cent in the US and was among the key brands growing in India.

Sales of Aberlour single malt grew by 10 per cent in France, while both Ballantine’s and Chivas posted growth in the Brazilian and Russian markets.

Some of the group’s blended whiskies presented differing results, with Passport growing its sales by 23 per cent but 100 Pipers dropping by 14 per cent after being hit by structural changes in the Thai market.

• Diageo, Scotland’s largest distiller, yesterday issued bonds worth just under $3.3bn (£2.1bn) for “general corporate purposes, including repayment of maturing long-term debt and outstanding commercial paper”.

Barclays, BofA Merrill Lynch, Goldman Sachs, JP Morgan, Santander, Standard Chartered Bank and UBS acted as joint book runners for the owner of the Johnnie Walker brand.