Pernod Ricard to return to growth this year but predicts "soft" Q1

Pernod Ricard said it expects to return to organic growth this new financial year after small dip in sales in the 12 months to 30 June, but that first-quarter trading would be held back by inventory reductions and a "very weak" environment in China.

The French distiller, which owns 240 brands including Absolut Vodka, Beefeater, Havana Club and Jameson, reported net sales of €11.6bn for the year just gone, representing an organic decline of 1%. Reported sales were down 4%, held back by a €784m negative impact from currency movements.

Chairman and chief executive Alexandre Ricard said results were "robust" amid an environment of "economic and geopolitical uncertainty and spirits market normalisation after two years of exceptional post-pandemic growth".

Nevertheless, the company reported a sequential volume recovery through the second half across most markets.

Meanwhile, pricing, operational efficiencies and cost discipline led to an improvement in the organic gross margin of 108 basis points (bps), helping drive profit from recurring operations up 1.5% to €3.12bn.

"Our global scale, our agility and our portfolio of brands, the most extensive in the industry, combined with our capacity to understand and to invest behind our consumers’ desires and aspirations puts us in a very strong position to navigate these challenges," he said.

For the year ending June 2025, Pernod Ricard expects net sales to improve on an organic basis, helped by a continued volume recovery, while organic operating margins should remain stable. However, it predicts a "soft Q1 with further inventory adjustments in the US, a continued very weak macro context in China and a good performance in the rest of the world".

The company said its medium-term projections remain the same, aiming for the upper end of its 4-7% organic net sales growth guidance and 50-60bps operating margin expansion target.

Pernod Ricard shares were up 1.2% at €130.15 by 0905 in Paris.