Pernod Ricard reports “robust” results

Pernod Ricard wants to put the year that ended at the end of June behind it as quickly as possible and Chairman and CEO Alexandre Ricard has exactly that goal in mind. Ron Emler reports.

Profit from continuing operations fell 7% to €3,116 million, but increased 1.5% on an organic basis. Net sales fell 4% to €11,598 million, a 1% organic decline from 2023, broadly in line with guidance.

Earnings per share fell by 13%, which is why the dividend will not be increased compared to the previous year's €4.7 per share.

Ricard described the results as “robust in an environment of economic and geopolitical uncertainty and a normalization of the spirits market after two years of exceptional post-pandemic growth.”

He declined to provide a forecast for the current year, but reiterated his confidence in the Group's ability to return to its medium-term course, which entails organic net sales growth of between 4 and 7 percent and an organic improvement in the operating margin of between 50 and 60 basis points per year.

He promised to deliver “sustainable, expansive, profitable growth” and said organic net sales would “return to growth and volumes will continue to recover” this year.

This year will see “a weak first quarter with further inventory adjustments in the US, a continued very weak macroeconomic context in China and good performance in the rest of the world,” he said.

Positive outlook

The positive outlook caused shares to rise by 6 percent to 137 euros in early trading in Paris. A year ago, the price was 197 euros.

In the United States, which accounts for 30 percent of the French group's market, sales fell nine percent last year as consumers reacted to price increases, high interest rates and inflation.

Ricard said he expects the inventory reduction trend to continue in the current quarter before the market normalizes, also pointing to an improvement trend in the last three months of the year.

He expects that the fragile consumer situation in China will continue to impact sales, which fell by 10% over the course of the year.

Despite difficulties in the US and China (where there is a threat of tariffs on Cognac), he said Pernod Ricard would succeed because of its geographical reach, the breadth of its portfolio and the quality of its people.

China and USA

“The US will eventually return to its historical trend of 4 to 5 percent growth. China's long-term profile shows strong growth in the high single digits.”

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

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

Finance director Helene de Tissot said: “All the lights are green for India,” which is now Pernod Ricard's second-largest market, even though the company does not have a trading license for Delhi. The license costs the group an estimated 5 percent of its sales in the country.

Last year, the Group's strategic international brands suffered a total sales decline of 3%.

Jameson

Martell Cognac fell 10%, largely due to the Chinese market, but Jameson continued to grow with a global increase of 1% and Havana Club rose 8%.

Ricard announced that the sale of its Australian, New Zealand and Spanish wine interests to Australian Wine Holdco (the new owner of Accolade) would not be completed until next year – “probably in the spring”. However, the group indicated that the price achieved would be below the previous book value.

The group's share of net profit fell by 35 percent. This was “mainly due to the write-downs for the sale of wines,” said de Tissot.

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