Pernod beats expectations as U.S. consumers splurge on Jameson whiskey, China sales jump

By Dominique Vidalon

PARIS (Reuters) - Pernod Ricard said on Thursday it expects organic sales to return to growth in the full year, after strong performances in its key U.S. and Chinese markets helped the French spirits group beat first-half profit and sales forecasts.

Double-digit sales growth in China and a 5% sales rise in the United States propped up results for Pernod, the world's second-biggest spirits group after Diageo.

In the United States, Pernod Ricard's top market, stuck-at-home consumers splurged on its Jameson Irish whiskey and Martell cognac while a cocktail craze also lifted demand for Malibu rum and premium Avion tequila.

Last month rival Diageo also reported an unexpected rise in first-half underlying net sales growth as its premium tequila and bourbon flew off the shelves at U.S. retail stores.

Still, Pernod said the COVID-19 crisis would continue to weigh on duty-free sales - which slumped 47% in the first half of its fiscal year that began on July 1 - and disrupt alcohol consumption in bars and restaurants.

Chairman and CEO Alexandre Ricard told Reuters he expected organic sales growth in the second half to "more than offset" the 3.9% decline in the first half.

Still, there was disappointment among investors that Pernod Ricard did not commit to precise figures for sales and profit guidance for the full year and its shares fell 2.2% by 1030 GMT.

"The sanitary situation is far from stabilised. There are lockdowns in some countries. We still have no clear view on the Chinese New Year and vaccines are taking time," Ricard told analysts.

Ricard was cautiously optimistic" ahead of the Chinese New year celebrations that start on Feb. 12, saying he will not have "real data-driven feedback" on Chinese sales before the end of March-early April.

Pernod said profit from current operations in the six months to Dec. 31 reached 1.595 billion euros ($1.93 billion), an organic decline of 2.4% that was still better than analysts' expectations for a 7.9% fall.

This reflected tight control over costs and lower promotional spending in businesses and markets where demand was subdued such as travel retail. Advertising and promotional spending was set to increase in the second half to around 16% of sales for the full year.

Sales totalled 4.985 billion euros in the first half, representing an organic decline of 3.9%, compared with analysts' expectations for a 5.4% drop.

Last month, smaller French peer Remy Cointreau beat third-quarter sales forecasts and said it was confident that demand for its premium cognac in China and the United States would fuel a profit recovery this year.

($1 = 0.8245 euros)

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta, Devika Syamnath and Susan Fenton)