Pernod Ricard S.A.

Reported FY26 organic net sales declined roughly 4%, with reported net sales down 14% due to currency and perimeter impacts. Profit from recurring operations fell 5.2% organically and 17.9% reported; EPS was EUR 5.85, down 19%. Free cash flow was EUR 1.2 billion, up 6%, and cash conversion improved to 91% from a prior target of 80%. Organic operating margin was down 35 bps, with pressure from negative price/mix, tariffs, COGS inflation, lower volume absorption, and higher wet goods costs, partly offset by efficiency gains and lower structure costs. For FY27, management expects organic net sales to be broadly stable, A&P around 16% of sales, strategic investments at circa EUR 700 million, and cash conversion around 90%. Over the medium-term framework of FY27-FY29, the company aims for average organic net sales growth close to the lower end of the plus 3% to plus 6% range, margin expansion, strategic investments no more than EUR 700 million, and net debt/EBITDA below 3x by FY29.

Alexandre Ricard framed the year as a mixed backdrop: weakness in the U.S., China, and the Middle East was partly offset by growth elsewhere, especially India and several emerging markets. He emphasized that Pernod Ricard is adapting to faster-changing consumer behavior through smaller formats, affordability, RTDs, prestige, and purpose-led brand experiences. His tone was confident but cautious, repeatedly stressing that the company is focused on speed, agility, and using its broad portfolio and geographic footprint to capture share.

Mauve Croizat said the company largely protected profitability despite softer sales, with PRO down 5.2% organically and margin down only 35 bps. She pointed to gross margin pressure from negative price/mix, tariffs, inflation, and lower volume absorption, but said those were partly offset by operational efficiency, tighter A&P, and strong structure cost discipline, with structure costs down 8%. On cash, she highlighted free cash flow of EUR 1.2 billion, up 6%, and cash conversion of 91%, and said net debt remained broadly flat while net debt/EBITDA rose to 3.7x; the goal is to get below 3x by FY29. She also said strategic investments are being reduced to about EUR 700 million and the company is maintaining a progressive dividend policy.

Analysts pressed on whether U.S. trends could improve, but management said the lower-end medium-term framework reflects the view that the U.S. market will remain soft. On China, Alex said guidance is not predicated on a strong rebound, though underlying trends are improving and trade sentiment ahead of mid-autumn festival has turned cautiously optimistic. Questions on India focused on the IPO and the U.K.-India free trade agreement; management said the IPO discussion remains ongoing at board level and that the FTA should support Scotch and other imported spirits through new propositions, innovation, and pricing adaptation. Analysts also asked about margin pressure in FY27 and the efficiency program beyond FY28; management said wet goods, the Middle East conflict, and tariffs remain headwinds, but easing sales trends and ongoing cost control should help, while transformation is expected to uncover further opportunities.