EUROPE | Pernod Ricard has showcased resilience in its recent financial reporting despite a particularly difficult year for global markets.
Leading global spirits company Pernod Ricard has released its financial results for the first half of fiscal year 2025, showing resilience despite challenging market conditions across several key regions.
The first half of FY25 saw an overall organic sales decline of four percent (six percent reported) to €6,176m. Despite these challenges, the company managed to expand its operating margin organically. While volume showed positive growth, the price/mix was down six percent due to market mix. The company has demonstrated operational efficiency by achieving approximately €900m in efficiencies since FY23.
Looking at regional performance, the Americas experienced a four percent decline, with the US market specifically down by seven percent. Asia-RoW presented a mixed picture, falling five percent overall, with India showing impressive growth of six percent while China faced a significant 25 percent decline. Europe proved relatively resilient with just a two percent decline, and excluding Russia, actually grew by one percent. Global Travel Retail faced challenges, dropping nine percent, particularly affected by weakness in China and Korea.
The brand portfolio showed varying results across different categories. Strategic International Brands declined by six percent, primarily due to Martell's performance in China. However, Strategic Local Brands demonstrated positive momentum with 2 percent growth, particularly driven by strong performance from Seagram's whiskies. The Ready-to-drink (RTD) category emerged as a bright spot, showing robust growth of 15 percent. Specialty Brands experienced a five percent decline, though Bumbu maintained strong growth within this category.
From a financial position perspective, the company achieved Free Cash Flow of €440m, representing an increase of €139m compared to H1 FY24. Net debt increased to €12,050m, with the Net Debt/EBITDA ratio rising to 3.5x.
Looking ahead, the company has revised its outlook in light of current market conditions. For FY25, they expect a low single-digit decline in organic net sales. FY26 is being approached as a transition year with improving trends. The outlook becomes more optimistic for FY27-29, with projected organic net sales growth averaging between three to six percent. The company plans to achieve €1bn in efficiencies from FY26 to FY29 and is targeting a cash conversion rate of 80 percent and above. Throughout this period, they remain committed to maintaining marketing investment at approximately 16 percent of net sales.
Despite facing significant challenges, particularly in China and Travel Retail Asia, the company maintains a confident outlook in its strategy and the engagement of its teams to navigate through these cyclical headwinds. Their approach emphasises resilience and adaptability in response to current market conditions while maintaining focus on long-term growth objectives.
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