Pernod Ricard (EU:RI) reported a 7.6% year-on-year decline in organic sales for the first quarter of fiscal 2026, reflecting weaker-than-expected performance in key markets such as the United States, China, and India. Despite the soft start, the company reaffirmed its full-year guidance.
Quarterly revenue came in at €2.38 billion, broadly in line with consensus expectations but below Jefferies’ €2.47 billion estimate. The drop was driven primarily by inventory destocking in the U.S., weak consumer demand in China, and policy-driven headwinds in India.
Regional Performance
- Asia and Rest of the World: Sales declined 7%, better than the consensus forecast of -9.3% and Jefferies’ -11% estimate.
- Americas: Fell 12%, missing both consensus (-9%) and Jefferies’ (-9.5%) expectations.
- Europe: Declined 4%, compared to consensus at -2.3% and Jefferies’ forecast of -3.7%.
The company maintained its fiscal 2026 guidance, pointing to improving trends in the second half of the year. A rebound in Global Travel Retail is expected from Q2, supported by the resumption of Martell Cognac shipments to China. Pernod Ricard is also targeting €1 billion in efficiency gains through fiscal 2029, with investments capped at €900 million in 2026. Cash conversion is expected to exceed 80%, although tariffs and currency fluctuations remain key risks.
Strategic Outlook
Pernod Ricard reiterated its medium-term guidance for 3–6% average annual organic net sales growth between fiscal 2027 and 2029, alongside steady operating margin expansion. Advertising and promotion spending is set to stay near 16% of net sales, with flexibility by brand and market. Strategic investments are expected to normalize at around €1 billion starting in fiscal 2026.
Market Dynamics
The ready-to-drink segment grew 10%, supported by continued marketing investment. Stronger sell-out trends in the U.S. compared to the wider market and growth in Canada, Turkey, Japan, and South Africa helped offset some weakness. India also showed strength outside the Maharashtra region.
However, the U.S. and China remained major drags, with sales down 16% and 27% respectively, impacted by macroeconomic softness and inventory adjustments. In India, a sharp 50% excise tax hike in Maharashtra weighed heavily on results. Global Travel Retail fell 15%, largely due to delayed Cognac sales to China’s duty-free channel, though a recovery is expected later in the year.
Ahead of the results, Pernod Ricard shares had already been under pressure. Jefferies said the update was “broadly in line” with expectations but predicted a modest reduction in earnings estimates due to lower revenue and profit, as well as higher financing and FX costs.
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