Pernod Ricard (EU:RI) shares rose 3% on Thursday after the French spirits group reported a smaller-than-expected decline in first-quarter organic sales, supported by growth in India and higher sales volumes, despite continued weakness in the United States and China.
Organic net sales declined 0.9% during the quarter, compared with a company-compiled consensus forecast for a 1.7% fall. Analysts’ estimates ranged from a decline of 3.8% to a decline of 0.2%.
Reported net sales fell 6.3% to €2.23 billion, reflecting a €127 million negative impact from changes in the group’s business portfolio, primarily following the disposals of Imperial Blue and its wine operations. Currency movements reduced sales by a further €3 million, mainly due to the Indian rupee and Turkish lira.
Sales volumes increased 6% during the quarter, while volumes across Pernod Ricard’s Strategic International Brands rose 2%. Excluding the United States and China, the group recorded 4% sales growth across its remaining markets.
India Sales Increase 19% as Demand Recovers
India was a principal contributor to the group’s first-quarter performance, with sales increasing 19% year-on-year.
Pernod Ricard attributed the growth to consumer demand, continued premiumisation and double-digit increases in sales of imported spirits, including Jameson, Absolut and Ballantine’s.
The performance also benefited from the comparison with the previous year’s changes to excise policies in Maharashtra.
The company said preparatory measures relating to a potential initial public offering of its Indian business had resulted in additional inventory being supplied to distribution channels, providing a further benefit to quarterly sales.
Pernod Ricard emphasised that any decision to proceed with the proposed listing remains subject to board approval.
Across the wider Asia and Rest of the World region, sales increased 9%, supported by the Indian business.
US and China Sales Decline Amid Inventory Adjustments
Sales in the United States fell 10% during the quarter, reflecting inventory adjustments and continued weakness in the domestic spirits market.
Pernod Ricard estimated that the overall US spirits market declined approximately 2% in value, while the bottled spirits segment contracted by around 4%.
The company said the reduction in US sales was consistent with its expectations and reflected ongoing adjustments to distributor inventories.
In China, sales declined 25% as trade inventory reductions continued against a challenging economic backdrop.
However, underlying depletions, which measure sales from distributors into the market, returned to growth during the period.
Pernod Ricard said this development reflected cautious optimism among distributors ahead of the Mid-Autumn Festival.
Martell recorded growth in off-trade depletions, while sales through bars, restaurants and other on-trade channels remained affected by regulatory restrictions.
The company expects inventory adjustments to continue influencing reported sales in both markets during the financial year, although it anticipates an improvement in underlying trends in China.
European and Americas Revenue Remains Under Pressure
European sales declined 6% during the first quarter, reflecting the timing of shipments in certain markets and continued pressure on on-trade demand.
Sales across the Americas region fell 9%, primarily reflecting the performance of the United States.
Global Travel Retail revenue decreased 4%, with trading affected by disruption associated with the conflict in the Middle East.
Despite the regional declines, the group reported positive volume growth overall, supported by its performance in India and other international markets.
Full-Year Sales Guidance Maintained
Pernod Ricard maintained its outlook for the current financial year, forecasting organic net sales to remain “broadly stable” amid uncertain trading conditions.
The company expects sales declines in the United States and China, partly reflecting inventory adjustments, while anticipating continued growth across other markets.
India is expected to remain a principal source of growth, supported by demand for premium spirits and the group’s established brand portfolio.
For the financial years 2027 to 2029, Pernod Ricard is targeting average annual organic net sales growth close to the lower end of its previously indicated range of 3% to 6%.
The company cited continued weakness in the US spirits market as a factor influencing its medium-term expectations.
Pernod Ricard also expects to expand its organic operating margin through a programme targeting €1 billion in operational efficiencies between fiscal 2026 and fiscal 2028.
The group is aiming to reduce its net debt-to-EBITDA ratio to below three times by fiscal 2029.
The first-quarter results reflect continued regional differences in demand, with growth in India and higher group volumes partly offsetting weaker trading in the United States, China and Europe.
About Pernod Ricard
Pernod Ricard (EU:RI) is a French international spirits group producing and distributing alcoholic beverages across global markets.
Its brand portfolio includes Jameson, Absolut, Ballantine’s and Martell, with products sold through retail, hospitality and travel retail channels.
The company operates across Europe, the Americas, Asia and other international markets, with its financial performance influenced by consumer demand, distribution inventories, currency movements and regulatory conditions.
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