Pernod Ricard (RI) Q1 2026 earnings summary

Executive summary

• Q1 FY26 net sales reached €2,384m, down 7.6% organically and 14.3% reported, mainly due to declines in China and the USA, with negative FX and perimeter impacts.

• U.S. sales fell 16% due to inventory adjustments and subdued market, while China contracted 27% amid weak consumer sentiment, regulatory impacts, and inventory adjustments.

• India showed strong underlying growth except in Maharashtra, where excise policy changes dampened demand.

• Global travel retail sales dropped 15–16%, with recovery expected from Q2 as cognac sales in China duty-free resume.

• Positive sales momentum noted in Canada, Turkey, Japan, and South Africa, partially offsetting declines in key markets.

Financial highlights

• Reported sales declined 14%, with a negative FX impact of €143 million and a perimeter impact of €54 million from brand and wine disposals.

• Americas sales declined 12% organically; Asia/Rest of World down 7%; Europe down 4%.

• Price mix was negatively impacted by market mix, and volumes declined in key markets.

• U.S. sell-out performance improved, narrowing the gap to market to 2-3 points, with Jameson, Absolut, and Kahlúa outperforming competitors.

• India net sales grew 3%, but would have been +7% excluding Maharashtra's excise impact.

Outlook and guidance

• Expectation for improving organic net sales trends in H2, driven by easier comps in China, resumption of China duty-free sales, and dynamic India performance.

• Full-year guidance unchanged, with anticipated organic net sales growth of 3–6% per annum in the medium term and annual operating margin expansion.

• Operational efficiency program targeting €1 billion in savings by FY2029 to support margin defense.

• Cash generation remains a focus, with CapEx and strategic inventory investments below €900 million for FY2026.

• A&P investment ratio to remain at ~16%; focus on strict cost control.