Pernod Ricard (RI) H1 2026 earnings summary

Executive summary

• H1 FY26 marked by a 5.9% organic net sales decline and 14.9% reported drop, with softness in the US and China offset by growth in other regions and improving Q2 trajectory.

• Operational efficiency programs delivered rapid cost reductions, including a 10% drop in structural costs and progress toward €1bn in savings, with one-third expected in FY26.

• Free cash flow improved by 9.5% to €482m, supported by normalized strategic investments and working capital optimization.

• Portfolio management continued with disposals of lower-growth, lower-margin brands, including Imperial Blue, sharpening focus on premium brands.

• FY26 is a transition year with stable outlook, focus on cash generation, deleveraging, and maintaining a strong balance sheet.

Financial highlights

• Net sales: €5,253m, down 5.9% organically and 14.9% reported; Q1 down 8%, Q2 down 5%.

• Profit from Recurring Operations declined 7.5% organically and 18.7% reported, mainly due to FX.

• Gross margin fell 216 bps to 59.3%, impacted by tariffs, inflation, and lower fixed cost absorption.

• Free cash flow reached €482m, up 9.5% year-over-year, driven by working capital improvements.

• EPS down 20% to €4.04 due to lower reported profit and negative FX.

Outlook and guidance

• FY26 outlook unchanged; expects stronger H2 with improving top-line trends and organic net sales growth to accelerate.

• Strategic investments revised down to ~€750m for FY26, capped at €800m annually for FY27–29.

• Cash conversion ratio target of 80%+ to be achieved in FY26, one year ahead of plan.

• Net debt/EBITDA ratio targeted below 3x by FY29; currently at 3.8x.

• FX expected to be a significant headwind for the full year.