Pernod Ricard reported a 4% organic decline in net sales for fiscal 2026, with reported sales down 14% as the global spirits group faced persistent headwinds in key markets. The company’s shares fell 5.53% to $63.86 in pre-market trading, extending declines from the prior close of $67.60.
Profit from recurring operations dropped 5.2% organically and 17.9% on a reported basis, while earnings per share declined 19% year-over-year to EUR 5.85. Gross profit margin remained robust at 58.4% over the last twelve months, though organic operating margin contracted by 35 basis points. Free cash flow rose 6% to EUR 1.2 billion, with cash conversion at 91%, exceeding the company’s 80% target.
Regional performance varied significantly, with the U.S. market posting a 14% sales decline and China, representing 7% of total sales, down 19%. The Middle East saw a 29% drop in fourth-quarter sales due to regional conflicts. India, Pernod Ricard’s second-largest market, continued to expand, driven by double-digit growth in strategic international brands. Royal Stag maintained its position as the world’s top-selling whiskey with approximately 32 million cases sold.
Second-half organic growth improved to -1.3% from -5.9% in the first half, while markets excluding the U.S. and China grew 0.5% for the full year. The top 16 markets in this group recorded a 2% increase in sell-out value, twice the broader market growth rate of about 1%. Global travel retail sales edged down 3%, despite international passenger traffic running 10% above pre-pandemic levels.
Pernod Ricard guided for broadly stable organic net sales in fiscal 2027, with advertising and promotion spending expected to hold steady at around 16% of net sales. Strategic investments are projected at EUR 700 million, down from EUR 800 million previously. The company accelerated its EUR 1 billion efficiency program, now targeting full delivery by fiscal 2028, one year ahead of schedule. Net debt to EBITDA is projected to fall below 3x by fiscal 2029, with net debt broadly flat at EUR 1.2 billion.
Chairman and CEO Alexandre Ricard highlighted the company’s agility amid shifting consumer behavior, noting strong momentum in India. Group Deputy CFO Maeve Croizat emphasized the company’s ability to limit margin erosion despite the challenging environment.
