Last checked at 
* Q1 sales up 1.3% on underlying basis vs 3.3% consensus
* Pernod Ricard mulls price hikes in U.S. post tariffs
* Keeps guidance which notably factors in U.S. tariff risks
(Recasts with CEO interview, adds CFO comments, shares)
By Dominique Vidalon
PARIS, Oct 17 (Reuters) - France's Pernod Ricard
said on Thursday it may raise prices on spirits like Glenlivet
Scotch whisky to counter U.S. trade tariffs, at a time when it
is also grappling with decelerating growth rates in key markets
like China and India.
The owner of Mumm champagne, Absolut vodka and Martell
cognac posted a steeper-than-expected slowdown in first quarter
revenue on weakness in emerging markets and duty-free travel
retail, triggering a 3% fall in its share price.
The company, which flagged a "particularly uncertain
environment", maintained its full-year profit forecast, however,
even when taking into account the impact of U.S. trade tariffs.
It is under pressure from U.S. hedge fund Elliott, which
holds a 2.5% stake, to improve profit margins and corporate
governance.
European wine and spirit exporters will be hit from Oct. 18
by duties intended by President Donald Trump's administration as
punishment for illegal EU aircraft subsidies.
Many are now considering how they can raise prices and
remain competitive in the United States. The tariffs, approved
by the World Trade Organization, include 25% duties on goods
ranging from French wine to Scotch whisky.
Although Pernod Ricard benefited from a share price bounce
when it emerged the list excluded blended whiskies, cognac and
champagne, the tariff hit will be "significant" in the U.S.,
even though it is limited to single malt Scotch and Spanish
wine, Chief Executive Alexandre Ricard told Reuters.
The group could raise prices to make up for the higher
duties, which will hit brands such as Glenlivet and Campo Viejo
Spanish wine, he said.
Finance Chief Helene de Tissot told analysts on Thursday
that U.S. tariff risk also "remains a factor" over the longer
term as it is not possible to exclude future changes in the list
of products targeted.
FIRST QUARTER MISS
In August, Pernod Ricard, the world's second-biggest spirits
group behind Diageo, indicated it expected a relatively
soft first quarter, citing a very high year-ago comparison basis
in Asia.
For the first quarter ended Sept. 30, Pernod reported sales
of 2.483 billion euros ($2.75 billion), a like-for-like rise of
1.3%.
That compared with a growth rate of 10.4% in the year-ago
quarter and missed analysts expectations of 3.3 % growth.
"Q1 appears to have missed on travel retail, down 6%, with
most other main markets in line with expectations" said JP
Morgan analysts in a note.
Sales growth was 6% in China, compared to 27% in the
year-ago quarter, with a notable decline in Chivas whisky sales
due to challenging market conditions including the closure of
some night clubs.
Martell cognac sales in China benefited from a price rise
but sustainable inventory management weighed on volumes, Pernod
said.
Its United States arm fared better, making a good start and
delivering 6% sales growth in the first quarter.
In February, Pernod vowed to lift its margins and shareholder
returns under a three-year strategic plan that Elliott has
described as a first small step.
($1 = 0.9030 euros)
(Reporting by Dominique Vidalon;
Editing by Sudip Kar-Gupta, Sarah White and Kirsten Donovan)
