By Scott Wright

SCOTCH whisky giant Pernod Ricard has warned it is on course for a major slump in profits after seeing sales plunge in the wake of the coronavirus pandemic.

The Chivas Brothers owner is now guiding on a 20 per cent reduction in profits from recurring operations for its current financial year, based on current assumptions on the impact of Covid-19.

The drinks giant had flagged in February its expectation of profits growth of between 2% and 5% as it cited “additional pressure related to the Covid-19 outbreak”. It had guided on profits growth of 5% to 7% on August 29 last year.

The fresh guidance issued yesterday came as Pernod, which makes whisky brands Chivas Regal, Ballantine’s and Royal Salute, reported a 14.5% fall in sales in the third quarter, to €1.74 billion.

Sales have tumbled by 11% per cent in China in the year to date on the back of the closure of on-trade premises from the end of January and the earlier timing of Chinese New Year. And in global travel retail stores, sales have dropped by 13%, with the decline severe from February because of lockdown measures across the world to halt the spread of the disease.

While the distiller flagged a positive start to the third quarter in the US, citing the positive impact of Jameson, The Glenlivet, Malibu and its speciality brands, it noted there had been a slowdown in March on the back of confinement and social distancing measures that have been imposed in most states.

Pernod reported sales of €7.21 billion for the first nine months of the year, an organic decline of 2.1%.

Alexandre Ricard, the firm’s chairman and chief executive, hailed the Pernod business model as “resilient” but noted that the pandemic has led to a “significant deterioration of the environment across the globe”.

He added: “Under current assumptions of the impact of Covid-19, we are confirming our guidance of an organic decline in profit from recurring operations for FY20 of c.-20%. We are staying the strategic course while implementing a comprehensive action plan to mitigate costs and tightly manage cash.

“Thanks to our solid fundamentals and strong liquidity position, I am confident in Pernod Ricard’s ability to bounce back from today’s challenges to achieve its growth potential.”

In February, Pernod reported a 2.7% rise in sales to €5.47bn for the first half of its financial year.