Chivas Brothers weathers mixed markets as first half sales fall 5%

The Scotch whisky division of Pernod Ricard has reported lower net sales in the six months to December 2025. Growth in India and Turkey has tempered softer trading in key regions, while margins are feeling the strain of tariffs and foreign exchange fluctuations.

Chivas Brothers, the Scotch whisky arm of Pernod Ricard, has reported total net sales down 5% in the first half of its financial year to the end of December 2025. The result comes against what the company describes as contrasting market conditions across its global footprint,  according to a statement shared with the drinks business.

The performance sits alongside the wider group picture. As previously reported by db, Pernod Ricard posted first-half sales of €5,253 million, an organic decline of 5.9% and 14.9% lower on an absolute basis, with operating profit down 19%.

Contrasting markets

Chivas Brothers attributed its resilience to its geographic spread and diverse portfolio. India delivered growth of 10% and Turkey rose 32% in the half year.

Flagship blended Scotch brands Chivas Regal and Ballantine’s core range were broadly flat over the period. The Glenlivet single malt outperformed its competitive set in the United States.

Within the broader Pernod Ricard results, sales in the United States fell 15% while China declined 28%. India was 4% ahead at group level and global travel retail was down 3%.

Margins affected by tariffs

Official figures published on the Chivas website show H1 FY26 PRO of €1,614 million, representing an organic decline of 7.5% and a reported decline of 18.7%.

Gross margin declined organically by 216 basis points. According to the published figures, this reflected a moderately negative price and mix impact of around 50 basis points, tariff increases of around 70 basis points on the US and China, and a net cost of goods sold effect of a low single-digit increase driven by inflation from aged wet goods, lower fixed costs absorption and savings on dry goods. Cost of goods sold benefited from operational efficiencies.

A and P expenditure accounted for 13% of net sales, with phasing skewed towards the second half. Rapid implementation of a simplified organisation and strict cost discipline led to a 10% reduction in structure costs, with this expected to continue in the second half.

Operating margin contracted organically by 55 basis points and by 142 basis points on a reported basis to 30.7%. The company cited an accretive perimeter effect on operating margin. Foreign exchange had an adverse impact of €187 million, largely relating to the US dollar, Turkish lira, Indian rupee and Chinese yuan.

Profit, cash and debt

Group share of net PRO was €1,018 million, down 20%. The company reported optimisation of financing costs, leading to a decrease in recurring financial expenses, with the average cost of debt reduced to 3.2% from 3.4%. Income tax on recurring operations was reduced in line with the reduction in PRO.

Group share of net profit stood at €975 million, down 18 per cent. Non-recurring operating expenses included costs of group restructuring and disposals’ proceeds and impairments. Earnings per share declined by 20% to €4.04, reflecting lower group share of net profit from recurring operations and unfavourable foreign exchange.

Free cash flow was €482 million, up €42 million or 9.5% compared with H1 FY25, driven by optimised strategic investments and operating working capital management, leading to improved cash conversion, according to the company website.

Net debt decreased over the 12 months to December by around €900 million to €11,168 million, with a first half increase versus June 2025 of €441 million. The net debt to EBITDA ratio at average rate stood at 3.8 times at 31 December 2025, reflecting lower EBITDA, including foreign exchange and the timing of dividend payments.

Looking ahead

Commenting on the results, Nodjame Fouad, CEO, gold brand unit aged spirits and Champagne, said: “Thanks to Chivas Brothers’ diverse brand portfolio and broad geographic footprint, we remain strongly positioned to deliver sustainable growth and meet consumer trends in the current business environment of contrasting market conditions. Looking forward, we welcome the recent news of the China tariff on Scotch being halved to 5% and efforts to bring the UK India FTA into force and remain confident in the outlook for Scotch whisky and its enduring global appeal.”

For FY26, the company expects a transition year with improving trends in organic net sales skewed towards the second half. It intends to maintain A and P at around 16% of net sales and to defend organic operating margin through strict cost control and implementation of its FY26 to FY29 €1 billion operational efficiencies programme.

Strategic investments have been revised to around €750 million, with cash conversion targeted at around 80% and above from FY26. Foreign exchange impact is expected to be significantly negative.

Over the medium term from FY27 to FY29, Pernod Ricard is projecting organic net sales growth in the range of 3-6% annum on average, alongside annual organic operating margin expansion, according to its published targets.

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