Pernod Ricard Reports FY25 Organic Net Sales Decline of 3.0%, Strong Operating Margin Expansion

Pernod Ricard reported FY25 organic net sales of -3.0%, with declines in China, USA, and GTR Asia impacting the mix. However, many markets posted resilient to strong growth, leading to gaining or maintaining shares in most of them. The company achieved a strong FY25 organic operating margin expansion at +64bps, supported by a €900m efficiency program and strong cost discipline. Free Cash Flow was €1.1bn, and the proposed dividend was €4.70 per share, stable versus FY24.

Pernod Ricard (RI), the world's second-biggest Western spirits maker by revenue after Diageo DGE, reported a 3% fall in full-year 2025 organic sales on Thursday, in line with forecasts. The French company's 2026 fiscal year is expected to be one of transition, with improving sales trends skewed towards the second half. The company cautioned that sales would decline in the first quarter due to distributor inventory adjustments in the United States and soft consumer demand in China.

Pernod Ricard's 2025 fiscal year was marked by tariff uncertainty and sliding sales in the United States and China. Despite these challenges, the company achieved a strong organic operating margin expansion of +64bps, supported by a €900m efficiency program and strong cost discipline. Free Cash Flow for the year reached €1.1bn, and the proposed dividend was €4.70 per share, stable versus FY24.

Sales reached €10.959 billion in the twelve months to June 30, representing an organic decline of 3%, which met analysts' expectations. Profit from recurring operations stood at €2.951 billion, marking an organic decline of 0.8%. The company reiterated its guidance for between 3% and 6% annual organic sales growth for 2027-2029, along with annual organic margin expansion.

The Americas region reported a 3% decline in sales, with the United States experiencing a 6% drop. The Asia-Pacific region saw a 4% decline, while the rest of the world posted a 2% decline. However, the company maintained or gained market share in most regions, driven by strong performance in markets such as Canada, Brazil, and South Africa.

Pernod Ricard's free cash flow improved significantly due to improved operating working capital and decreased strategic inventories. The company's net debt decreased by €224m to €10.727 billion, driven by improved free cash flow and positive FX impact from the USD weakening. The proposed dividend of €4.70 per share was stable compared to FY24.

Looking ahead, Pernod Ricard expects a decline in Q1 2026 due to high comparison and distributor inventory adjustments in the United States. However, the company expects Q2 to benefit from the resumption of sales of Martell in China Duty Free, with GTR expected to return to growth in FY26.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_S8N3PA02G:0-pernod-ricard-annual-sales-hit-by-u-s-and-chinese-woes/
[2] https://www.businesswire.com/news/home/20250827651602/en/Pernod-Ricard-Steering-Through-a-Challenging-Environment-With-Agility-Discipline-and-Strategic-Conviction