Pernod Ricard reports ‘robust’ results

Pernod Ricard wants to put the year to the end of June behind it as quickly as possible and chairman and chief executive Alexandre Ricard is intent on doing just that. Ron Emler reports.

Profits from recurring operations fell by 7% to €3,116m, but at the organic level they rose by 1.5%. Net sales fell by 4% to €11,598m, an organic decline of 1% compared with 2023, largely in line with forecasts.

Earnings per share fell by 13% and consequently the dividend will not be increased from last year’s €4.7 per share.

Ricard called the results “robust within an environment of economic and geopolitical uncertainty and spirits market normalisation after two years of exceptional post-pandemic growth.”

He declined to offer a forecast for the present year but reiterated his confidence in the group’s ability to return to its medium-term trajectory of net organic sales growth of between 4% and 7% and organic operating margin gains of between 50 and 60 basis points a year.

He promised to deliver “sustainable, stretched profitable growth” and said that this year net organic sales would be “back to growth with continued volume recovery.”

This year, he said, would see “a soft Q1 with further inventory adjustments in the US, a continued very weak macro context in China and a good performance in the rest of the world.”

Positive outlook

The positive outlook sent the shares 6% higher to €137 in early trading in Paris. A year ago they were €197.

In the US, which comprises 30% of the French group’s market, sales last year fell by 9% as consumers reacted to price rises, high interest rates and inflation.

Ricard said he expected the destocking trend to continue for the present quarter before the market began to normalise. He also pointed to an improving trend in the final three months of the year

He expects the fragile consumer background in China to continue to affect sales, which were 10% down in the year.

Despite the difficulties in the US and China (where the threat of punitive tariffs loom over Cognac) he said Pernod Ricard would succeed because of its geographic spread, the breadth of its portfolio and the quality of its people.

China and US

“The US will get back at some point to its historical trend of 4% or 5% growth. China’s long-term profile is of strong growth in the high-single digits. “

“India [which grew by 6% last year] is a high single or even low-double digit growth market.

“In travel retail [up 2% in FY24] passenger traffic is back above its pre-pandemic levels,” he said.

Finance director Helene de Tissot said: “All lights are green for India”, which is now Pernod Ricard’s second largest market even without a licence to trade in Delhi, which it is thought costs the group 5% of its turnover in the country.

During the past year the group’s Strategic International Brands as a group suffered a 3% fall in sales.

Jameson

Martell Cognac lost 10% largely due to the Chinese market but Jameson’s growth continued with a 1% global gain and Havana Club put on 8%.

Ricard revealed that the sale of the Australian, New Zealand and Spanish wine interests to Australian Wine Holdco (Accolade’s new owner) would not be completed until next year, – “probably the spring” – but the group gave a clue that the price achieved will be at a loss to the previous book value.

The group’s share of net profit fell by 35%. That, said de Tissot, was “largely due to the impairment for the sale of the wines”.

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