Pernod Ricard SA (EU:RI) has revised its full-year sales expectations downward after reporting minimal growth in the third quarter, with organic net sales rising just 0.1% as declines in the United States and China offset gains in other regions.
The French spirits group now expects organic net sales to fall between 3% and 4% for FY26, pointing to ongoing disruption linked to the Middle East conflict.
Despite the weak backdrop, the result came in slightly ahead of expectations, beating analyst forecasts of a 0.5% decline by 50 basis points, according to RBC Capital Markets, which maintained its “sector perform” rating and €100 price target.
“We can’t see this advancing the investment case, either positively or negatively,” RBC analysts said, noting that the modest outperformance was largely driven by stronger-than-expected results in Asia.
Reported net sales for the third quarter totalled €1.95 billion, down 14.6% year on year, impacted by a €175 million foreign exchange headwind and a €159 million reduction linked to disposals, including its Wines and Imperial Blue businesses.
In the United States, organic sales declined 12% in the quarter and 14% over the year to date, while the broader bottled spirits market fell 4%, with stronger performance in bars and restaurants compared with retail channels.
China also remained weak, with sales down 7% in the quarter and 24% year to date, reflecting lower demand for Martell cognac and Scotch whisky. However, RBC noted that the quarter benefited from the timing of Chinese New Year.
Excluding the U.S. and China, organic net sales rose 5% in the third quarter. India delivered the strongest growth, up 11% in Q3 and 6% year to date, supported by premiumisation trends and demand for imported spirits. Canada recorded double-digit growth driven by ready-to-drink products and Jameson, while Brazil returned to growth after disruption caused by a methanol crisis.
Europe posted modest growth of 1%, led by brands such as Bumbu and Perrier-Jouët. Global Travel Retail increased 11% in the quarter, helped by the resumption of Cognac sales in Chinese duty-free channels, although the company now expects the segment to decline slightly for the full year due to travel disruption in the Middle East.
By category, ready-to-drink products led performance with organic growth of 26% in Q3 and 16% year to date. Strategic International Brands grew 2% in the quarter but remain down 5% year to date, while Specialty Brands declined 9% in Q3 and 8% over the same period.
For the nine months to March, reported net sales fell 14.8% to €7.20 billion, with foreign exchange movements reducing revenue by €515 million, mainly due to weakness in the U.S. dollar, Indian rupee, and Turkish lira.
RBC added that the company’s full-year margin outlook remains unchanged but lacks clarity, with no update on previously referenced discussions with Brown-Forman.
Pernod Ricard said it now expects strategic investments to come in below €700 million for FY26 and confirmed an interim dividend of €2.35 per share, payable on July 24.
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