Pernod Ricard pips Q1 forecasts as demand picks up in China

By Dominique Vidalon

PARIS (Reuters) - Spirits group Pernod Ricard posted a stronger-than-expected 5.7 percent rise in first-quarter underlying sales, helped by accelerating demand for its Martell cognac and Chivas whisky in China, and by robust growth in its main U.S. market.

The owner of Mumm champagne and Absolut vodka said that, in an environment that remained uncertain, it was keeping its forecast for a 3-5 percent rise in full-year profit from recurring operations after last year's 3.3 percent growth.

For the first quarter ended Sept. 30, Pernod Ricard reported sales of 2.29 billion euros ($2.71 billion), marking a like-for-like rise of 5.7 percent and above analysts' estimates for 3.4 percent like-for-like growth.

Pernod, the world's second-biggest spirits group behind Britain's Diageo, said disruption from a ban on alcohol sales near highways in India, its second largest market, continued to weigh on sales but added this was now easing off.

Sales in India rose 2 percent in the quarter, having previously slowed down to 1 percent in full year 2016/17 from 12 percent growth in full year 2015/16.

Pernod also reiterated that a gradual improvement in its performance was expected from the second quarter.

In China, sales rose 15 percent in the quarter as growth accelerated in all product categories and notably demand for Martell cognac. Chivas whisky also returned to growth.

The group, however, cautioned that because the Chinese New Year was due on Feb. 16, 2018, three weeks later than in 2017, this would negatively impact its second quarter.

In the United States, sales rose 4 percent, driven by double-digit growth for Jameson whiskey but Absolut vodka was still in decline in a competitive environment.

($1 = 0.8473 euros)

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)