Pernod Ricard sees improving H2 momentum despite annual sales decline

Pernod Ricard (EU:RI) reported lower sales for fiscal 2026 as challenging conditions in the United States and China weighed on performance, although trading improved during the second half and the French spirits group delivered stronger cash generation.

Net sales totalled €9.40 billion, compared with €10.96 billion in the previous financial year. This represented an organic decline of 3.9% and a decrease of 14.2% on a reported basis.

Profit from recurring operations reached €2.42 billion, down 5.2% organically, while the operating margin eased by 35 basis points on an organic basis to 25.8%.

Performance in the United States remained affected by a softer spirits market, cautious consumer spending and inventory adjustments, resulting in a 14% decline in sales.

China also remained challenging, with sales falling 19% as subdued consumer confidence affected demand for premium spirits, particularly cognac.

However, Pernod Ricard highlighted a meaningful improvement in trading as the year progressed. The organic sales decline narrowed from 5.9% during the first half to just 1.3% in the second half, providing encouraging momentum heading into the new financial year.

India continued to deliver strong growth, with sales increasing 7%, demonstrating the potential of one of the group’s key long-term growth markets. Pernod Ricard’s ready-to-drink portfolio also performed well, recording a 12% increase in sales.

The company proposed maintaining its dividend at €4.70 per share, continuing its commitment to shareholder returns despite the more challenging trading environment in its two largest pressured markets.

Looking ahead to fiscal 2027, Pernod Ricard expects organic sales to remain broadly stable. Continued softness in the United States and China is expected to be balanced by growth across other markets, with India anticipated to remain an important contributor.

The improving second-half trajectory, continued expansion in growth markets and stronger cash generation provide Pernod Ricard with a more supportive foundation as it enters fiscal 2027.