Pernod Ricard (RI) H1 2026 earnings summary

Executive summary

• H1 FY26 saw organic net sales decline by 5.9% (reported -14.9%), mainly due to softness in the US and China, FX headwinds, and brand disposals, while other regions showed resilience and operational efficiencies improved cost structure by 10%.

• Profit from Recurring Operations declined 7.5% organically and 18.7% reported, with net profit down 18% year-over-year.

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

• Strategic investments normalized to €750m, with a focus on cash generation and maintaining a strong balance sheet.

• Portfolio management continued with the disposal of Imperial Blue and other non-core brands.

Financial highlights

• Net sales: €5,253m, down 5.9% organically and 14.9% reported year-over-year; Q1 down 8%, Q2 down 5%.

• Profit from Recurring Operations: €1,614m, down 7.5% organically and 18.7% reported.

• Gross margin fell 216bps organically to 59.3%, impacted by tariffs, inflation, and lower fixed cost absorption.

• Free cash flow reached €482m, up 9.5% year-over-year, driven by working capital improvements.

• 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; organic net sales growth anticipated to accelerate.

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

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

• Net debt/EBITDA ratio targeted below 3x by FY29; currently at 3.8x.

• FX expected to be a significant headwind for the full year.