Pernod Ricard returned to volume growth in Q3 but downgraded its full-year sales guidance, citing disruption from conflict in the Middle East.
After a torrid H1, the spirits giant has begun to see sales improve as it cuts prices, introduces smaller formats, targets convenience and launches more low & no alcohol products.
Organic net sales stabilised at 0.1% growth in the quarter, as tough trading in Pernod’s Chinese and US businesses was counteracted by an average 5% growth in the rest of the world. Group volumes rebounded to 4% growth in the quarter.
However, the group downgraded its full-year sales guidance, amid uncertainty over the Iran War. Having previously guided a decline of less than 3%, Pernod now expects organic sales to fall by 3% to 4%.
Explaining the decision to downgrade forecasts in a call with analysts, Pernod CFO Hélène de Tissot said secondary headwinds arising from the conflict in Q4 were likely to revolve around “disruption to supply” and reduced “cultural willingness to travel”.
”The impact [so far] has mainly been in the affected area in March in both domestic markets and in travel retail.”
Pernod reiterated in the results that its current financial year to 30 June 2026 was a “transition year”, with underlying improvements expected to continue through H2.
The slump in China and the US has moderated since H1, when sales fell organically 28% and 15% respectively: in Q3, the decline was reduced to falls of 7% and 12%.
Net sales at Pernod totalled €1.9bn in Q3. While stable on an organic basis, sales were down 14.6% on a reported basis as the group’s financials were hit by unfavourable foreign exchange rates and the sale of its wines & Imperial Blue business.
“We are actively managing what is within our control, adapting our resources with agility, deploying our efficiency programme, [and] steering the organisation to fuel our future growth and optimise our cash generation,” the company said in an early morning update to investors.
Pernod maintained its mid-term guidance for organic net sales growth of 3% to 6% for fiscal years 2027-2029.
De Tissot reiterated that talks with Brown-Forman over a potential merger remained ongoing, but declined to comment further.
“Overall, this is a good print with important beats in most major markets,” said Barclays analyst Laurence Whyatt.
“The Middle East conflict understandably has changed expectations, but it is encouraging to see no changes to FY27-29.”
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