PERNOD RICARD

Recommendation history

• H1 2025HoldHold: Pernod Ricard delivered H1 organic sales down 4%, with volumes up 2% and operating margin expanding 65 bps, but management cut FY25 guidance to a low-single-digit organic sales decline. The long-term case rests on India, brand resilience and roughly EUR1 billion of additional efficiencies through FY26-FY29, while the near-term setup remains impaired by China, U.S. weakness, Duty Free disruption and up to EUR200 million of potential tariff/antidumping costs.
• 2024-08-29HoldHold: FY24 organic sales fell 1% including Russia, but were broadly stable excluding the exit; organic recurring operating profit rose 1.5%, with gross margin up 108 bps and operating margin up 80 bps. The long-term premium-spirits thesis remains credible, but FY25 starts with a soft US quarter, another potentially 10% decline in China, higher financing costs and no formal guidance, leaving the recovery insufficiently de-risked for a clean buy.
• 2024-05-16HoldHold: Pernod Ricard has credible sustainability execution, including SBTi validation of its 1.5°C-aligned targets, nearly 60% water replenishment in stressed regions, and more than 12,000 bartenders trained versus a 10,000 target. However, the call offered no quantified earnings benefit or cost savings, while climate-related agricultural risk, packaging R&D, water costs, and consumer willingness to pay for sustainable premium products remain unresolved.
• 2024-03-28HoldHold: Pernod Ricard has a credible U.S. recovery plan, but the call provided no timing or quantified growth proof. The opportunity is meaningful—Jameson household penetration is at least half that of its two leading competitors, while RTD, tequila and on-premise execution offer upside—but wholesaler destocking remains unresolved, pricing is normalizing to low-single digits, and management would not commit to closing the market-share gap by FY25.
• H1 2024HoldHold: Pernod Ricard delivered weak H1 momentum—organic sales and recurring operating profit both fell 3%, EPS declined 16%, and recurring free cash flow dropped 68% to €301 million—while net debt/EBITDA rose to 3.3x. Management expects broadly stable FY24 organic sales and low-single-digit recurring profit growth, but the recovery depends on U.S. destocking unwinding, China stabilizing, and India accelerating; analysts’ pushback exposed that the medium-term 4%-7% growth framework remains an aspiration rather than near-term guidance.
• Q1 2024HoldPernod Ricard delivered Q1 organic sales of -2%, with both the U.S. and China down 8%, partly offset by +7% price/mix. Management still expects FY2024 organic growth within its 4%-7% medium-term range, probably near the low end, alongside organic operating-margin expansion; however, Q2/H1 guidance was withheld and recovery assumptions depend on U.S. destocking ending and China improving. Stance: hold.
• 2023-08-31HoldHold: Pernod Ricard delivered an excellent FY23—organic sales +10%, operating profit +11%, EPS +11%, and gross margin +3 bps—but the FY24 setup is less compelling. Q1 will decline on tough U.S./China comparisons, the company withheld a FY24 growth target, FX is a headwind, and substantial investment plus higher debt costs limit near-term upside despite strong brands and a planned €500–800 million buyback.