Pernod Ricard, along with several other major European drinks brands, has been dealing with faltering sales due to increased global uncertainty and an unfavourable foreign exchange market.
French drinks giant Pernod Ricard announced its first half results for the financial year 2025 on Thursday, decreasing its sales outlook for the fiscal year as geopolitical uncertainties continue to mount.
Organic net sales for the first half of the fiscal year fell 4%, coming up to €6,176 million. This was mainly because of ongoing weak performance in China. An unfavourable foreign exchange primarily because of the Turkish lira, Argentinian peso and Nigerian naira also contributed to this situation.
However, good results in some emerging and mature markets went some way in offsetting China’s lacklustre sales.
Pernod Ricard owns several wine brands including Campo Viejo and Brancott Estate, as well as spirit brands Malibu, Absolut and Havana.
Group share of net profit came up to €1.19 billion, which was a decrease of 24% on an annual basis, while free cash flow came up to €440m.
The company also shared that it now estimated organic net sales to see a low-single digit fall for the year ending 30 June 2025.
In contrast, Pernod Ricard had previously communicated expectations of a return to sales growth for this fiscal year. However, it still expects to sustain its organic operating margin.
Pernod Ricard said in its H1 FY25 earnings press release: “Ongoing challenging macroeconomic environment and intense geopolitical uncertainties continue to impact the spirits market, particularly the worsening context in China and Travel Retail Asia, notably impacting Martell. This leads us to revisit our outlook for FY25 and beyond.
“Conditional on the challenges posed by the global tariff environment, FY26 is expected to be a transition year with improving trends in organic net sales. Amid extraordinary trade tensions, we are focused on defending organic operating margin to the fullest extent possible. Cash conversion to improve.”
Sales in the Americas reduced 4% during the first half of FY25, while US sales dropped 7%. Canada and Brazil saw good growth, with an increase in market share as customer demand bounced back. However, Mexican performance struggled somewhat.
Indian sales grew 6%, mainly boosted by robust Jameson, Glenlivet, Ballantine’s, Royal Salute and Royal Stag performance.
Euronews has contacted Pernod Ricard for comment.
Pernod Ricard Asia performance dragged down by China
Pernod Ricard’s China sales dropped 25% in the first half of the fiscal year 2025, impacting the company’s overall Asian performance. This was mainly because of continuing macroeconomic challenges, as well as lagging customer demand.
Although the Royal Salute and Martell brands saw marked plunges in China, the Absolut, Jameson and Olmeca brands did relatively well during this period. A considerable fall in gifting, as well as a softer Chinese yuan affected sales too.
On the other hand, the Vietnamese and Japanese markets saw strong growth, although the Taiwanese market struggled somewhat.
Both reported and organic sales were very strong in Turkey, driven by Ballantine’s and Chivas. The South African market grew marginally as well.
