(Bloomberg) -- Pernod Ricard SA shares gained after the maker of Jameson Irish Whiskey said sales should improve in the US as demand returns to normal after the pandemic.

Revenue in the six months through June should show an improvement on the company’s fiscal first half, during which organic revenue dropped 3%, the company said Thursday. The stock rose as much as 6.3%, touching a two-month high.

“We’re nearing the end of normalization, so things should pick up at some point,” Chief Executive Officer Alexandre Ricard said in an interview, referring to sales in the US, where high interest rates have crimped restocking by retailers.

Pernod and other premium distillers have been facing weak sales as drinkers cut consumption of pricey spirits after soaring demand during the pandemic. Pernod has raised prices to offset lower volumes and higher input costs.

The maker of Perrier-Jouet Champagne and Martell Cognac said organic sales for the year through June will be broadly stable as the US market improves and Chinese drinkers remain cautious.  

“Consumer confidence in China is relatively weak and the trade is cautious,” Ricard said.

The company reduced the size of a share buyback to €300 million ($322 million) from previous expectations of €500 million to €800 million.

Pernod forecast low single-digit organic operating profit growth for the year. Analysts have been expecting annual organic growth in profit from recurring operations of 3.5% for the full fiscal year. 

The results were in line with expectations, Citigroup analyst Simon Hales said in a report. Analysts will probably cut their consensus forecasts, but Hales said this was widely anticipated by investors.

Pernod reiterated its mid-term organic net sales growth target in the upper range of a 4% to 7% increase.  

A rebound in China has been weaker than expected following an anti-dumping probe into French brandy, including cognac. Chinese authorities began the investigation after the European Union began looking into its electric vehicle subsidies.

Ricard said the company is continuing to cooperate and provide information to investigators. 

Sales in the US, China and Europe fell during the fiscal first half, with India being a lone bright spot by showing growth. Sales of Martell, Jameson and Chivas Regal were all down due to weaker demand in China, the US and Latin America.

RBC Capital Markets analysts James Edwardes Jones and Emma Letheren said Pernod’s results were “fine” and broadly in line with expectations while the company’s outlook was “mixed” after lowering organic sales growth targets and reducing the size of the share buyback. 

 

 

--With assistance from Joel Leon.

(Updates to include analyst comments and reaction)

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