Pernod Ricard reports 'slow start' as Chinese sales tank

French wine and spirits group Pernod Ricard reported a "slow start" to the new financial year, with organic sales falling on the back of ongoing weakness in China as well as the US.

Sales in the fiscal first quarter ended 30 September totalled €2.78bn, representing an organic decline of 5.9% and an 8.5% slump on a reported basis.

Sales in China plummeted 26% year-on-year, with the company warning of a more significant full-year decline than the year just gone. In the US, sales were down 10%.

"We experienced a slow start to the year, notably with China in sharp decline, in a context of continuing macroeconomic weakness impacting consumer sentiment, and with the US in decline, reflecting underlying sell-out performance amplified by inventory adjustments," Pernod Ricard said.

The company said the overall sales performance in the first quarter was softer than previous expected as weakness in China was also affecting the wider travel retail market across Asia.

Foreign exchange also had a €103m negative impact on the top line, mainly due to devaluations in the Argentinian peso, Turkish lira and Nigerian naira.

Despite the weak first quarter, Pernod Ricard said it expected organic net sales to return back to growth for the full year, and reiterated its guidance for 4-7% organic sales growth over the medium term.

Shares were up 1.8% at €125.70 by 1112 in Paris, rebounding after having fallen by more than 20% so far this year.