Pernod Ricard sales decline amid trade tensions

Just a week before it was due to announce its half-year results to the end of December, Pernod Ricard has taken the unusual step of advancing their publication as speculation continues to swirl around the drinks industry about global trading conditions and President Trump’s potential tariffs.

The results themselves were disappointing and Paris stock market procedures dictate that any material change in a company’s predictions must be reported immediately. 

In the week that Diageo revealed a 1% rise in its organic sales during the same period, the French group reported an organic sales decline of 4% to €61,8 billion against 12 months earlier. They were 6% lower in absolute terms.

Half-year profits fell by 2% organically but by 7% in total terms.

Diageo said that market conditions amid the global uncertainties meant it could not offer meaningful medium-term guidance but Pernod Ricard was more positive despite cutting its 2025 and longer-term outlook in the face of the turbulent times.

Against a previous forecast of returning to sales growth for the full financial year, it now predicts a low single-digit decline in organic net sales for the year ending in June. However, it hopes to protect its organic operating margin. 

Trade tensions

“Amid extraordinary trade tensions, we are focused on defending organic operating margin to the fullest extent possible,” it said.

Pernod Ricard said it expects to see an improving trend in organic net sales in the year to June 2026 which will be a “transitional year” with growth picking up to between 3% and 6% from 2027 to 2029.

Although there was no statement from chairman and chief executive Alexandre Ricard, the company said it was ‘determined to navigate the current cyclical headwinds with resilience and agility’.

The French group is less likely to be affected by Trump’s threatened tariffs on Canada and Mexico because its US sales of spirits produced in those countries account for just over 6% of its total sales.

Trump tariffs

However, if the US President carries out his threat to penalise spirits produced in the European Union, Pernod Ricard would be much more heavily penalised.

The company made some positive statements and the shares rose by about 3% on the Paris market.

There had been “sequential improvement” in the three months running up to Christmas with good performances in some mature and emerging markets partially offsetting the declining but improving US market. 

In the half year, US sales fell by 7% and China was “very weak,” with sales collapsing by 25%. India, however, achieved 6% growth.

The French group said that plummeting demand for Martell Cognac was responsible for almost 90% of its lower net sales due to the setbacks in China, where tariff penalties are in place. There had also been a 9% fall in global travel retail.

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