Pernod Ricard (RI) Q1 2025 earnings summary

Executive summary

• Q1 FY25 organic net sales declined by 5.9% year-over-year, or 8.5% on a reported basis to €2,783m, mainly due to weakness in the U.S. and China, adverse FX, and technical sales phasing in India.

• China sales dropped 26% due to macroeconomic weakness, low consumer demand, and tariffs; the U.S. declined 10% amid inventory adjustments and soft sell-out.

• India showed solid underlying growth but was affected by sales phasing, expected to reverse in Q2.

• Strong performances in Japan, Canada, Poland, Brazil, Turkey, Nigeria, and Travel Retail in the Americas and Europe partially offset declines.

Financial highlights

• Q1 FY25 sales: €2,783m, down 5.9% organically and 8.5% reported year-over-year; negative FX impact of €103m, mainly from the Argentinian Peso, Turkish Lira, and Nigerian Naira.

• Price/mix effect was -6% in Q1, mainly due to negative mix from U.S. and China; pricing was modest.

• U.S. net sales declined 10% year-over-year, with market sell-out normalizing at +1%.

• India grew 2% despite phasing issues; China sales dropped 26% due to weak consumer demand and tariffs.

• Global Travel Retail grew 3%, with strong results outside Asia.

Outlook and guidance

• Full-year guidance maintained for modest organic net sales growth and stable operating margin, with volume recovery expected despite a softer Q1 and weaker China.

• Medium-term framework reiterated: targeting upper end of +4% to +7% organic net sales growth and +50bps to +60bps organic operating margin expansion.

• U.S. sales expected to remain in decline but improve versus Q1; China to see a sharper full-year decline than initially estimated, but not as severe as Q1.

• India expected to deliver strong growth for the year as phasing reverses.

• A&P investment to remain at approximately 16% of net sales.