Global drinks giant Pernod Ricard issued a profit warning on Thursday, blaming a 20-percent drop in thirst for its products in China, and announced cost-cutting.
The net half-year result fell by 2.0 percent to 839 million euros ($1.15 billion), and the current operating profit by 7.0 percent to 1.359 billion euros.
Unfavourable exchange rates were an aggravating factor for the company which includes Chivas whiskey, Martell cognac and Absolut vodka among its brands.
The company, ranking number two in the sector after British group Diageo, said it now expected current operating profit to rise by 1.0-3.0 percent in its year 2013-2014 to the end of June.
This is about half the previous target range of 4.0-5.0 percent.
In the previous financial year, the current operating figure had risen by 6.0 percent.
The price of shares in the group was showing a gain of 2.36 percent to 85.18 euros in morning trading. The CAC 40 index was down 0.34 percent.
The group has warned for several months that its activities were slowing down in China where a campaign against corruption has led to reduction of conspicuous consumption of luxury goods and their use as bribes.
But Pernod Ricard chief executive Pierre Pringuet said that the company remained "confident" in the medium to long-term potential for the business in China.
This took account of favourable demographics, and the emergence of a westernised middle class, deputy chief financial officer Gilles Bogaert told AFP.
The latest tone was down from remarks in October when Pringuet had hoped to see a recovery from the beginning of this year.
In the final half of last year, group sales in China fell by 18.0 percent, pulling down overall sales by 7.0 percent to 4.57 billion euros
But on a comparable basis, sales were steady.
The group said that highly unfavourable exchange rate changes had hit the figures.
In the final quarter of last year alone, sales fell by 5.0 percent to 2.558 billion euros, although they rose by 2.0 percent on a comparable basis.
The figures showed that markets in France and the rest of Europe might be on the way to recovery, since six-month sales in France rose by 6.0 percent, and slipped by 2.0 percent in Europe.
Bogaert said that business was showing "a good rebound in Europe", driven by activity in eastern Europe and in Germany.
Pernod Ricard presented details of a cost-cutting programme called "Allegro" to save 150 million euros over three years, affecting mainly overheads.
The group, which employs 19,000 people of whom 2,800 work in France, is to publish annual results in August.
Global drinks giant Pernod Ricard issued a profit warning on Thursday, blaming a 20-percent drop in thirst for its products in China, and announced cost-cutting.
The net half-year result fell by 2.0 percent to 839 million euros ($1.15 billion), and the current operating profit by 7.0 percent to 1.359 billion euros.
Unfavourable exchange rates were an aggravating factor for the company which includes Chivas whiskey, Martell cognac and Absolut vodka among its brands.
The company, ranking number two in the sector after British group Diageo, said it now expected current operating profit to rise by 1.0-3.0 percent in its year 2013-2014 to the end of June.
This is about half the previous target range of 4.0-5.0 percent.
In the previous financial year, the current operating figure had risen by 6.0 percent.
The price of shares in the group was showing a gain of 2.36 percent to 85.18 euros in morning trading. The CAC 40 index was down 0.34 percent.
The group has warned for several months that its activities were slowing down in China where a campaign against corruption has led to reduction of conspicuous consumption of luxury goods and their use as bribes.
But Pernod Ricard chief executive Pierre Pringuet said that the company remained “confident” in the medium to long-term potential for the business in China.
This took account of favourable demographics, and the emergence of a westernised middle class, deputy chief financial officer Gilles Bogaert told AFP.
The latest tone was down from remarks in October when Pringuet had hoped to see a recovery from the beginning of this year.
In the final half of last year, group sales in China fell by 18.0 percent, pulling down overall sales by 7.0 percent to 4.57 billion euros
But on a comparable basis, sales were steady.
The group said that highly unfavourable exchange rate changes had hit the figures.
In the final quarter of last year alone, sales fell by 5.0 percent to 2.558 billion euros, although they rose by 2.0 percent on a comparable basis.
The figures showed that markets in France and the rest of Europe might be on the way to recovery, since six-month sales in France rose by 6.0 percent, and slipped by 2.0 percent in Europe.
Bogaert said that business was showing “a good rebound in Europe”, driven by activity in eastern Europe and in Germany.
Pernod Ricard presented details of a cost-cutting programme called “Allegro” to save 150 million euros over three years, affecting mainly overheads.
The group, which employs 19,000 people of whom 2,800 work in France, is to publish annual results in August.
