- Sales in six months to end of December decrease by 4% to EUR6.18bn (US$6.42bn)
- Final calendar quarter – group’s fiscal Q2 – down 3%
- Martell cognac brand “contributing to circa 90%” of total half-year sales decline
Pernod Ricard has reported its latest results earlier than expected, prompted by a switch of its near-term guidance to a decline in sales.
The group, which was scheduled to announce the figures from the six months to the end of December in a week’s time, said today that its top line in fiscal H1 fell 4%. The closing quarter of 2024 (fiscal Q2) improved on the previous three-month period, when sales decreased by 6%, slipping by 3% year-on-year.
The overall performance moved Pernod Ricard to revise its previous forecast of a rise in sales from the 12 months to the end of June, to a “low single-digit decline”. The change triggered regulatory rules that require immediate reporting.
While the US and China were singled out as the challenges geographically, cognac brand Martell was again highlighted as causing the group the most problems. Martell was flagged three months ago and again today, with the cognac “in strong decline contributing to circa 90% of total group net sales decline, due to China and Global Travel Retail”. Indeed, a 25% slump in half-year sales was the worst among Pernod Ricard’s ‘strategic international brands’ portfolio, in which only blended scotch whiskies Ballantine’s and Chivas Regal and Havana Club rum recorded value growth.
Also of note brands-wise was Jameson, with the Irish whiskey flat in value on a 3% volumes increase, meaning the brand had to sell more product in the half-year but made lower value sales.
All three of the group’s reporting regions were down in the half-year, most notably ‘Asia/Rest of World, which slipped by 5%. While the “ongoing challenging macro economic environment and weak consumer demand” in China (down 25% in sales H1) was noted, the “early signs of a very soft Chinese New Year (and) significant decline in gifting” suggests a less-than-positive prognosis for the market in the second half of fiscal 2025.
In the US, where sales declined 7% in the same period, the brand owner said it hopes to see an improvement in “sell-out” during the current half-year as a “soft US market shows improving trends and evidence of (a) gradual recovery”. Finally, ‘Europe’ slipped 2% while sales in global travel retail were down 9%. The “technical suspension of (the) duty-free regime on cognac” in China’s GTR channel, as anti-dumping tariffs on EU brandy – including cognac – came into force in December, is expected to weigh on the rest of the current financial year.
“Conditional on the degree of challenges posed by the global tariff environment, fiscal 2026 (to June next year) is expected to be a transition year with improving trends in … sales,” the company said today. “Amidst extraordinary trade tensions, we are focused on defending organic operating margin to the fullest extent possible.”
Earlier this week, Pernod Ricard’s main rival in international spirits, Diageo, delivered a 1% increase in its sales from the same period. Beer brand Guinness and Don Julio tequila were the London-headquartered group’s stand-out performers.
