Pernod Ricard (RI) investor relations material

Executive summary

• H1 FY26 saw a 5.9% organic decline in net sales, with softness in the US and China, but stable or growing sales in India (+4%), Turkey (+27%), and Japan (+6%).

• Operational efficiency program delivered rapid cost reductions, with structure costs down 10% and SG&A headcount down 18%.

• Free cash flow improved by 9.5% to €482m, driven by normalized strategic investments and working capital optimization.

• Strategic focus on cash generation, portfolio premiumization, and innovation, including global launches like Absolut Tabasco.

• Active portfolio management with disposals of lower-growth, margin-dilutive brands, including Imperial Blue and Mumm Napa.

Financial highlights

• Net sales: €5,253m, down 5.9% organically and 14.9% reported, with significant FX and perimeter impacts.

• Profit from Recurring Operations declined 7.5% organically and 18.7% reported, mainly due to FX headwinds.

• Gross margin fell by 216 bps, impacted by tariffs, price/mix, and inflation on aged liquids.

• Free cash flow reached €482m, up 9.5% year-over-year, driven by improved working capital and normalized strategic investments.

• Net debt at €11,168m as of December 2025, with net-debt-to-EBITDA ratio at 3.8x.

• EPS down 20% to €4.04 due to lower reported profit and negative FX.

Outlook and guidance

• FY26 expected to be a transition year with improving trends in H2 and focus on cash generation.

• Strategic investments revised down to €750m for FY26, normalizing to ≤€800m from FY27.

• Cash conversion target of 80%+ expected to be achieved in FY26, one year ahead of plan.

• Medium-term framework confirmed: organic top-line growth of 3–6% per year, with annual margin expansion.

• Intention to maintain a stable dividend for FY26, subject to approvals.

• Net-debt-to-EBITDA ratio targeted below 3x by FY2029.