Exchange rates hit Pernod Ricard

French spirits producer Pernod Ricard saw net profit from recurring operations drop 5% as it was hit by "unfavourable developments in foreign exchange rates".

The producer, whose brands include Beefeater gin and Absolut vodka, posted a sales drop of 3% on last year for the half year at €3,789m.

In Europe, profit from recurring operations fell 18%, with a 5% organic decline, "reflecting a difficult situation overall, in particular in Spain, the UK and Ireland".

Pernod said: "The foreign exchange effect on profit from recurring operations was negative by €101 million. Over the full 2009/10 financial year, and based on exchange rates at 12 February 2010, the negative currency effect on profit from recurring operations is estimated at between €100 and €120 million."

But the producer said it was tsicking to its forecasts for the year. "These factors enable us to confirm our guidance for organic growth of 1% to 3% in profit from recurring operations for the full 2009/10 financial year, while increasing the investment in strategic brands and markets," said Pierre Pringuet, Pernod Ricard chief executive officer.