Pernod Ricard upgrades outlook for 2020

Pernod Ricard has upgraded its forecast for 2020 with its full-year profit now expected to fall by 15%, and not by 20% as stated in March.

The French drinks group had previously warned that its profit from recurring operations could fall by as much as 20%. 

While some of its forecasting has been accurate, particularly with regards to performance in China and losses incurred in travel retail, “resilience” in the off-trade in the US and western Europe has led it to upgrade its forecasts.

The company’s assumption that business in China would be “very limited” in February and March, with a “slow recovery” from April has been proven to be “directionally correct”, as has its forecast that travel retail revenue would take an 80% hit from February to the end of June.

However, the forecast did not account for the six-week lockdown of all sales and production in India, nor for stronger off-trade performance than expected in the US and western Europe.

On balance, it believes Covid-19 disruption will not affect 2020 performance as much was initially feared.

This picture was echoed in results posted by fellow French drinks firm Rémy Cointreau.

In the first quarter of the year (the three months to June 2020), the company posted sales of €150.1 million, a reduction of 33.2% on the figure of €223.2m recorded in the same period last year. However, the company had predicted that sales would fall by between 50 and 55% in Q1.