Pernod Ricard (RI) H1 2025 earnings summary

Executive summary

• H1 FY25 organic net sales declined 4% year-over-year to €6,176m, with reported sales down 6% due to adverse FX impacts and weak China performance; sequential Q2 improvement and four consecutive quarters of volume growth were achieved despite macroeconomic and geopolitical headwinds.

• Organic operating margin expanded by 65bps to 32.1%, supported by €900m in efficiency savings since FY23 and strict cost discipline.

• Free cash flow improved to €440m, up €139m year-over-year, driven by better working capital management and normalization of capex.

• Group share of net profit from recurring operations fell 11% to €1,274m; group net profit declined 24% to €1,190m, impacted by higher financial expenses and restructuring costs.

• FY25 outlook revised to a low single-digit decline in organic net sales, with margin defense and efficiency focus; FY26 expected as a transition year, and FY27–FY29 targeting 3–6% organic net sales CAGR and further margin expansion.

Financial highlights

• H1 FY25 net sales: €6,176m, down 4% organically and 6% reported year-over-year.

• Profit from recurring operations (PRO): €1,985m, down 2% organically and 7% reported; operating margin 32.1%.

• EPS: €5.06, down 11% year-over-year; diluted EPS €4.72.

• Free cash flow: €440m, up €139m year-over-year.

• Net debt increased by €1,099m to €12,050m; net debt/EBITDA at 3.5x as of December 31, 2024.

Outlook and guidance

• FY25 organic net sales expected to decline low single digits, with operating margin sustained organically.

• FY26 anticipated as a transition year with improving trends; FY27–FY29 targeting 3–6% organic net sales CAGR and further margin expansion.

• Efficiency initiatives to deliver €1bn in savings from FY26–FY29; capex to normalize to ~€1bn from FY26 onward.

• Cash conversion targeted at 80%+ as investments normalize and working capital optimization continues.

• Stable dividend policy to be maintained for FY25, subject to approvals.