Pernod Ricard (RI) H1 2026 earnings summary

Executive summary

• H1 FY26 saw a 5.9% organic net sales decline and 14.9% reported drop, mainly due to softness in the US and China, FX headwinds, and brand disposals, while other regions showed growth and operational efficiency gains.

• Operational efficiency program delivered rapid cost reductions, including a 10% drop in structural costs and improved cash generation, with one-third of €1bn target savings expected by FY26.

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

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

• FY26 is a transition year with a focus on deleveraging, sustainable value growth, and innovation.

Financial highlights

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

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

• Gross margin fell 216 bps 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 outlook unchanged; expects stronger H2 with improving top-line trends and organic net sales growth 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.

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