Chivas owner takes action on costs as virus dilutes sales

● But boss of Pernod Ricard confident in spirits group’s ability to bounce back

The owner of the Chivas Regal and Glenlivet Scotch whiskies is suspending a major share buyback and keeping a lid on costs in response to the Covid-19 pandemic after revealing a slump in sales.

French spirits giant Pernod Ricard, whose other brands include Mumm champagne, Absolut vodka and Martell cognac, reported sales of just under €1.74 billion (£1.52bn) in the three months to the end of March, a 14.5 per cent slide on a like-for-like basis.

The firm, which ranks as Scotland’s second-largest producer of Scotch, after Johnnie Walker owner Diageo, said it was suspending a share buyback of up to €500m and keeping a tight grip on its costs.

The group reiterated its revised March guidance for an organic fall of about 20 per cent in full-year profit from recurring operations.

Pernod Ricard said the business as a whole was showing

“good resilience” through the coronavirus crisis. It said it had extended help across its communities through donations of hand sanitiser, or the pure alcohol required for its production, health equipment and support to its suppliers and customers.

“A comprehensive cost mitigation programme has been implemented, together with active management of our cash position,” the group added. “We have adapted our manufacturing and supply chains to ensure they remain broadly operational.”

The firm noted that its key Chinese export market was on a slow and gradual recovery since the start of April.

A breakdown of year-to-date sales for the first nine months of the drink producer’s financial year showed that its “strategic international brands” were down 2 per cent, with the third quarter suffering a 20 per cent plunge.

The performance was largely driven by Martell and Chivas Regal in China and within the global travel retail market. It pointed to the “continued strong dynamism” of Jameson, The Glenlivet, Malibu, Royal Salute and Beefeater brands.

Chairman and chief executive Alexandre Ricard told investors: “Our business model and strategy are resilient. Performance in H1 through the start of Q3 was solid, thanks to the implementation of our ‘transform & accelerate’ strategic plan. Since then, the Covid-19 pandemic has led to a significant deterioration of the environment across the globe.

“I would like to praise the exemplary behaviour of our teams and their impact on their respective communities around the world at this very difficult time.

“Under current assumptions of the impact of Covid-19, we are confirming our guidance of an organic decline in profit from recurring operations for full-year of circa 20 per cent.

“We are staying the strategic course while implementing a comprehensive action plan to mitigate costs and tightly manage cash. Thanks to our solidfundamentalsandstrong liquidity position, I am confident in Pernod Ricard’s ability to bounce back.”