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UPDATE 2-Pernod Ricard eyes 10% full-year profit growth after sales beat forecasts

* Q3 underlying sales up 19.1% vs expected 11.3%

* Eyes 10% rise in FY operating profit

* “Excellent” Chinese New year performance (Adds comments from CFO to Reuters, details)

PARIS, April 22 (Reuters) - Pernod Ricard said on Thursday it expected 10% organic profit growth in fiscal year 2020/21 after strong demand in its key U.S. and Chinese markets helped the French spirits group beat third quarter sales forecasts.

The owner of Mumm champagne, Absolut vodka and Martell cognac expected sales to accelerate in the fourth quarter as bars and restaurants gradually reopen, though travel retail is expected to remain subdued due to limited passenger traffic.

By 0704 GMT Pernod shares had gained 0.3% at 173.65 euros.

“Management guidance for 10% organic EBIT growth in FY21E is significantly better than the market expected and compares to current consensus of 7.1%,” Citi analysts wrote in a note.

Pernod Ricard’s fiscal year starts on July 1.

Pernod, the world’s second-biggest spirits group after Diageo, reported sales of 1.955 billion euros ($2.35 billion) in the three months to March 31 - up 19.1% on a like-for-like basis, beating analysts’ expectations of 11.3% growth.

That performance marked a return to sales growth after the previous two quarters showed a decline.

Sales for the first nine months reached 6.941 billion euros, an organic growth of 1.7%, with sales in the United States continuing to grow at a mid-single digit pace, as stuck-at-home consumers splurged on Glenlivet scotch and American whiskeys while a cocktail craze boosted demand for Malibu rum and Kahlua liquors and tequila.

EXCELLENT CHINESE NEW YEAR

U.S. sales of Jameson Irish whiskey were softer in the third quarter but this compared to strong year-ago sales due to COVID-related pantry loading and the launch of Jameson Cold Brew. Finance Chief Helene de Tissot told Reuters by phone that Jameson’s underlying sales trend remained “unchanged”.

In China, Pernod Ricard recorded triple-digit growth during the third quarter, boosted by an “excellent” performance during the Chinese New Year festivities, with very strong demand for Martell cognac. This meant the group was able to raise cognac prices by 3-4% in April in China, de Tissot said.

In India, Pernod’s other key market after the United States and China, all key brands showed double-digit sales growth in the third quarter but a resurgence of COVID-19 cases in March and April was leading to new restrictions.

The group’s performance was flattered somewhat by easier comparisons with last year, notably in China where COVID-19 restrictions that shut bars and clubs were largely implemented in March 2020.

Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Uttaresh.V;Editing by Elaine Hardcastle

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