London - Pernod Ricard added to concern that growth in emerging markets is ebbing as it reported a slowdown in some less-established regions yesterday.
China, previously a driver of growth at the maker of Jameson whisky, was among countries where gains would be less pronounced than before, Europe’s second-largest distiller said. Where the company previously benefited from emerging markets offsetting weakness in other parts of the world, it was now counting on “ongoing growth” in the US.
The French liquor maker is not the first company to point to slowing growth in developing regions. Larger competitor Diageo said last month that it saw some “soft spots” in economies including Brazil and the Asia-Pacific region.
The MSCI emerging markets index of 819 stocks has declined 13 percent this year.
“The problem remains Asia, and particularly China,” for Pernod, Martin Deboo, an analyst at Investec in London, said. Deboo said he would review his forecasts and target price for the company.
Pernod fell 1.7 percent to e89.18 (R1 237) by 12.30pm in Paris trading, reversing a gain of as much as 2.2 percent.
The company reported annual sales and profit that were broadly in line with analysts’ estimates.
Revenue growth in countries including China slowed in the second half of the year to June.
Chief executive Pierre Pringuet said he expected the Chinese slowdown to continue in the first half of this financial year. Government spending restraints had curbed sales of cognac and whisky, and were particularly affecting bottles of spirits sold at more than $200 (R2 076), Pringuet said, including some Martell cognacs.
Pernod also experienced tougher conditions in countries including Brazil, it said.
“Economic cycles: this is life as usual,” Pringuet said. “We’ll capture growth where it is.”
Emerging markets accounted for about 42 percent of sales, he said, and he expected the US to be a “growth driver”.
Pernod would not rule out “strategic acquisitions”, though “our clear guidance is that we want to retain our investment grade rating”, Pringuet said.
Laetitia Delaye, an analyst at Kepler Capital Markets in Paris, said Pernod’s guidance might imply the company was unlikely to forecast “more bullish” growth this financial year.
Pernod’s annual revenue rose 4 percent on an organic basis to E8.57 billion. – Bloomberg