Pernod Ricard S.A.

Fiscal 2026 organic net sales were down roughly 4% and reported net sales were down 14%; organic profit from recurring operations fell 5.2% and reported PRO fell 17.9%; EPS was EUR 5.85, down 19%. Organic operating margin declined by 35 bps, free cash flow was EUR 1.2 billion, up 6%, and cash conversion improved to 91%. Management said FY27 should bring broadly stable organic net sales, A&P at circa 16% of sales, strategic investments at circa EUR 700 million, and cash conversion at circa 90%. On the medium-term framework, the company is targeting organic net sales growth averaging close to the lower end of plus 3% to plus 6% over FY27-FY29, operating margin expansion, strategic investments of no more than EUR 700 million, cash conversion of about 90%, and net debt-to-EBITDA below 3x by FY29.

Alexandre Ricard framed the year as one of “contrasted environment,” with U.S. inventory adjustments, weak demand in China, and Middle East disruption offset by better trends elsewhere. He emphasized that the company is adapting faster to consumer shifts through convenience, affordability, RTDs, prestige, and purposeful innovation, while leveraging a broad portfolio and geographic mix. His tone was constructive but cautious, especially on the U.S. and on the medium-term growth backdrop.

Mauve Croizat said PRO margin pressure was driven mainly by gross margin, including negative price/mix, adverse market mix, tariffs, inflation, lower volume absorption, and higher wet-goods costs, but that efficiencies helped offset these headwinds. She highlighted that the cost savings program delivered about half of its EUR 1 billion target in FY26 and structure costs declined 8%, while non-working A&P was down 33% as an example of improved effectiveness. She also noted free cash flow growth of 6%, cash conversion of 91% versus a prior 80% target, net debt broadly flat, and net debt-to-EBITDA at 3.7x with a goal to get below 3x by FY29.

Analysts focused on whether the U.S. could improve, what gave management confidence on China, the FY27 margin outlook, India IPO optionality, and the pace of RTD growth. Management said the U.S. remains the key reason the medium-term framework is near the low end of the range, China assumptions remain cautious, and destocking there should weigh more in Q1 than later in the year. On India, Alexandre Ricard said the IPO discussion is still ongoing at Board level and that legal preparatory steps are being taken to preserve flexibility, while on RTDs he said the company intends to invest more and accelerate time-to-market, route-to-market, and marketing execution.