by Augustin Turpin and Emma Rumney

(Reuters) – Pernod Ricard said on Thursday it expected its sales to return to growth next year despite difficulties in the Chinese and U.S. markets, after reporting a slight organic decline in annual sales (-1.0%), in line with consensus and its own forecasts.

The group said it confidently reiterated its medium-term ambition of organic growth in turnover “at the top of a range between 4-7%” and “organic growth in the current operating margin of +50 to +60 basis points”.

In April, the group confirmed its annual targets of “generally stable” organic turnover, while already reporting a slowdown in its activities in China, where activity had fallen by 12%.

The spirits producer posted quarterly sales of €11.6 billion for the 2023-24 financial year, compared to €12.14 billion in the same period last year.

China also said on Thursday that it would not impose temporary anti-dumping measures on cognac imported from the European Union (EU) following a preliminary investigation conducted since January, sending shares up 8%.

For the 2023-2024 financial year, Pernod Ricard’s net sales fell 9% in the United States and 10% in China, with the group saying it expected a “soft” performance in the first quarter with further inventory adjustments in the United States and a “very weak macroeconomic context in China”.

The group, however, said most of its other markets saw a recovery in volume sales in the second half. It said it had recorded solid growth in some key regions such as India, where sales rose 6%.

Elsewhere, however, he said he expected a good performance and that the continued recovery in volumes would help bring net sales back into positive territory.

“The key message is the return to growth,” Chairman and Chief Executive Alexandre Ricard told Reuters in an interview, adding that consumer sentiment remained volatile but was resilient in many markets.

(Written by Augustin Turpin, with Emma Rumney, edited by Jean-Stéphane Brosse and Kate Entringer)

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