Pernod Ricard Slashes Guidance on Coronavirus Hit

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03/24/2020 | 08:37 am
Alexandre Ricard

By Cristina Roca

Pernod Ricard SA drastically cut its guidance for the year ending June 30 as the spread of the novel coronavirus hit its business more severely than it had initially anticipated.

The French spirits maker now expects its profit for recurring operations, or PRO, to fall organically by about 20% for fiscal 2020, it said Tuesday.

Pernod had originally guided for organic PRO growth of 5%-7% for the fiscal year, and in February cut its view to 2%-4% organic PRO growth due to the coronavirus, which at that point was mostly hitting its China and travel retail businesses.

The maker of Absolut vodka said it now expects its China business to have a slow recovery starting in April, and that February and March business should have been very limited.

Its travel retail segment should experience a 80% drop in business from February through the end of June.

In all other markets, Pernod said the on-trade, which represents drinks served in bars, restaurants and other establishments and makes up a quarter of its sales, should post no sales from mid-March through the end of June. Outlets around the world are either shut or not ordering more products, Pernod said. In the off-trade channel, which represents products sold to consumers at stores, sales for the same period should decline by 10%, Pernod said.

Pernod Ricard Chief Executive Alexandre Ricard backed the company's mid-term plan.

"We are staying the strategic course while implementing a comprehensive action plan to mitigate costs," he said.

 

Write to Cristina Roca at cristina.roca@dowjones.com; @_cristinaroca

 

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