Pernod Ricard shares up 5% despite US and China headwinds

Pernod Ricard’s shares rose in Paris after the group struck an upbeat tone about its medium-term growth prospects, despite ongoing complications in the US and China. The French spirits maker reaffirmed its long-term sales and margin guidance while outlining a major cost-saving drive.

Pernod Ricard’s shares rose by 5% in early trading in Paris today (28 August) after the company presented an optimistic outlook for the medium term.

In the year to the end of June, organic sales fell by 3%, as expected by analysts. But chairman and chief executive Alexander Ricard said he expected a trend of improving sales in the new financial year despite the continuing uncertainties in the US and weak consumer demand in China, its second largest market.

He also said that the French group would defend its margins to the utmost extent and continue on a cost-saving drive predicted to generate savings of €1 billion over the next four years.

Transition year

Ricard said that the present year would be one of transition, but went on to confirm that it was maintaining its guidance for between 3% and 6% annual organic sales growth for 2027-2029, along with annual organic margin expansion.

Ricard told analysts that “volatility is here to stay”, but beyond the current short-term disrupted environment, the company believes the underlying trends are favourable. Volatility, he said, created opportunities.

Annual results

In the past financial year, Pernod Ricard achieved sales of €10.959 billion, representing an organic decline of 3%. Profit from recurring operations was €2.951 billion, a 0.8% organic fall on 2024.

Pernod said distributor inventory adjustments would continue in the United States and that, following the minimum price agreement with Beijing Martell, shipments to China would not resume until later this year after inventories had been adjusted.

Ricard said the group was gaining or maintaining share in 12 of its 17 top markets. However, it was hit badly in three of its four “must-win” territories, America, China, retail travel and India.

US market downturn

In the key US market, sales fell by 6% and the company reiterated that President Trump’s present tariff regime could cost it €35m in the current year. Ricard said, however, that there are signs of an upturn in consumer sentiment in the US.

China sales slump

Sales in China, its third-largest market, fell 21% as weak consumer demand for Scotch and the effective banning of Martell sales for the second half of the year took their toll.

That impact will continue into the autumn as inventories are worked through, but the reopening of the retail travel market is expected to help sales pick up in the second quarter.

The company says it is “increasing its penetration” of the market for premium spirits among the growing middle class.

India the standout market

The standout market was again India, which now accounts for 13% of Pernod Ricard’s business. Sales grew by 6% and Jameson’s became the biggest-selling brand of imported bottled spirits, with India now its second-largest market.

Ricard remains upbeat

Ricard was determined to be upbeat despite acknowledging that the period until Christmas would be difficult.

“Over the past two fiscal years, we have been navigating through what we call the perfect storm with geopolitical tensions and macroeconomic challenges”, he said.

“And after two decades of growth, we’ve adapted to that environment with very strong discipline and agility [in] the environment. And we have protected our margin even more. This is what we’re all about. building our brands and gaining share everywhere.”

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