Pernod Ricard noted improving momentum in travel retail as it reported half-year results for the period ended 31 December 2025.
Global travel retail sales declined -3% year-on-year in the period but rebounded in Q2 following the resumption of Martell Cognac sales in China travel retail. This followed the resolution of an anti-dumping investigation into brandy imports from the EU by Chinese authorities in July.
Pernod Ricard reported strong travel retail sell-out growth in Europe and the Americas as well as sustained momentum in the cruise channel in the half, but the Asia market beyond China continues to show weakness, notably in South Korea. The company said the travel retail channel should deliver broadly stable business for the full year.
Overall, first-half group sales fell by -14.9% year-on-year (-5.9% in organic terms) to €5.25 billion. Sales were heavily affected by foreign exchange movements (-€356 million), primarily linked to the US Dollar, Indian Rupee and Turkish Lira. This was also driven by a negative perimeter impact (-€217 million) largely due to brand disposals, including the Imperial Blue business.
The company said performance remained broadly stable when excluding the USA and China, where declines were amplified by inventory adjustments. Growth was recorded across many markets in all regions, while Q2 showed improving trends.
Pernod Ricard Chairman and Chief Executive Officer Alexandre Ricard commented, “Our priorities are clear: to strengthen the desirability of our brands as a foundation of long-term, sustainable growth; to drive greater efficiency across the organisation; and to enhance cash generation.
“Our balanced geographical footprint, diversified portfolio and highly engaged teams put us in a unique position to navigate a contrasted environment and seize opportunities. We remain fully committed to adapting with agility and executing with discipline to meet evolving consumer needs and capture growth.
“Building on the journey we began in 2023, we have made significant progress on our FY26-29 €1 billion Operational Efficiencies program, including the roll-out of our Fit for Future operating model. One-third of the targeted efficiencies will be delivered this year and we have accelerated the normalisation of our strategic investments.
“I remain confident in the attractive fundamentals of our industry, Pernod Ricard’s strategy and the resilience of our operating model to deliver sustainable value over time.”
Profit from Recurring Operations totalled €1.62 billion, down -18.7% reported and -7.5% in organic terms. Gross margin declined 216 basis points organically, impacted by tariffs in the USA and China, inflation on aged Wet Goods, and a moderately negative price and mix effect.
The group highlighted strong operational efficiencies and strict cost discipline, including a sharp -10% reduction in structure costs. As a result, operating margin contracted by just -55bps organically to 30.7%.
Group share of net profit fell -18% to €975 million.
Performance by region
The Americas sales declined -12% organically, led by a -15% drop in the USA amid continued soft spirits market conditions and inventory adjustments expected to impact the full year.
In a note, Goldman Sachs Equity Research said: “The USA accounts for 20% of group sales and is therefore the single largest market for Pernod. Pernod is vulnerable to potential consumer demand weakness and could see some share losses if Jameson’s momentum slows and tequila, where Pernod is under-indexed, continues to gain share.
“Pernod could also be vulnerable to destocking among wholesalers or import tariffs between the USA and EU in the future.”
Europe sales declined -3% year-on-year, reflecting modest market contraction in France and softer conditions in Germany and Spain, offset by resilient trading in the UK and growth in Poland.
Asia and Rest of World declined -4%, with India a bright spot with a +4% rise (+8% excluding Imperial Blue). In India, the company cited strong underlying demand, premiumisation trends and accelerating momentum in Q2.
China sales fell by a sharp -28% due to a tightened regulatory environment impacting on trade, weak consumer sentiment and inventory adjustments. However, premium brands including Absolut and Jameson recorded growth.
Performance by brand group
Strategic International Brands declined -7%, driven largely by Martell’s weak performance in China. However, Martell delivered strong growth in South Africa, Nigeria and the USA.
Jameson declined in the USA but showed improving sell-out momentum, with solid growth in India and Germany. Absolut recorded strong growth in India, China, Türkiye and Canada, while Perrier-Jouët delivered double-digit growth across all regions.
Strategic Local Brands declined -2%, with Royal Stag and Blenders Pride growth offset by the Imperial Blue decline.
Specialty Brands fell -7%, although Bumbu delivered strong growth. Ready-to-Drinks were a standout performer, rising +12% across the portfolio.
Outlook
Pernod Ricard described FY26 as a transition year, with improving organic net sales trends expected in the second half. The company is implementing a €1 billion ‘Fit for Future’ operational efficiencies programme from FY26 to FY29.
In the medium term (FY2027-FY2029), Pernod Ricard is targeting organic net sales growth of +3% to +6% annually with annual organic operating margin expansion.
Goldman Sachs Equity Research said:“Management continues to expect FY26 to be a transition year with improving trends in organic sales skewed toward H2 (+0.9% cons). Pernod also reaffirmed its objective to defend organic operating margin to the fullest extent possible, supported by cost control and implementation of FY26-29 €1 billion efficiencies programme.
“The company remains focused on cash generation, with strategic investments now expected at c.€750 million (below €900 million previously), and strong working capital management to drive c.80% and above cash conversion from FY26 (previously guided for an improvement vs. 74% in FY25).” ✈
