Pernod Ricard Q3 sales slip 3% as China, Travel Retail weigh on results

Investing.com -- Pernod Ricard (EPA:PERP) on Thursday reported a 3% drop in third-quarter organic sales, as tariff uncertainty, supply disruptions in India, and weaker performance in China and Global Travel Retail weighed on results, though the company reaffirmed its full-year guidance.

Net sales for the quarter stood at €2.28 billion, bringing year-to-date revenue to €8.45 billion, a 4% organic decline and a 5% drop on a reported basis. 

Currency effects reduced sales by €145 million over the nine-month period, partially offset by a €3 million benefit from group structure changes. 

Volume rose 1% year-to-date, while price and mix fell 5%, reflecting a weaker market composition.

In the Americas, Q3 organic growth reached 3%, supported by a 2% rise in the U.S. where wholesalers accelerated purchases ahead of potential tariffs. 

Despite the quarterly uptick, the region remains down 2% for the fiscal year. Jameson, Absolut, particularly the new Ocean Spray RTD variant, and Kahlua contributed to the U.S. recovery, alongside solid gains in Canada and Brazil.

Europe saw a 7% decline in the quarter and a 3% drop year-to-date. France recorded growth driven by Ballantine’s, while Spain was impacted by the timing of Easter and Germany continued to struggle amid economic headwinds. Poland remained largely stable.

Asia and the rest of the world posted a 6% contraction in both Q3 and the nine-month period. India rose 1% in the quarter and 5% year-to-date, though the third quarter was hampered by customs clearance changes and a resolved production stoppage. 

China saw a 5% decline in Q3 and a steep 22% fall year-to-date, dragged by Martell’s underperformance. 

Japan delivered strong momentum, with Perrier-Jouët in double-digit growth, while Korea remained weak in a politically tense environment.

Global Travel Retail sales fell 31% in Q3 and 17% year-to-date. The company cited the suspension of duty-free Cognac sales in China and a strong prior-year comparison base as contributing factors, though it noted continued growth in Europe and stable traffic in the Americas.

By brand category, Strategic International Brands declined 4% in Q3 and 6% year-to-date, with positive contributions from Jameson, Chivas Regal, Ballantine’s, and Absolut offset by declines in Martell and Royal Salute. 

Strategic Local Brands were down 5% in the quarter but flat year-to-date, led by Seagram’s whiskies, Olmeca, and Kahlua. Specialty Brands fell 8% in Q3 and 6% for the nine months, though Bumbu and Skrewball saw gains.

Despite the softer results, Pernod Ricard confirmed its fiscal 2025 outlook of a low-single-digit decline in organic net sales, with operating margin expected to be sustained through cost discipline and operational efficiencies. 

The French company continues to monitor tariff developments in China and the U.S., which are factored into its current projections. Advertising and promotion spending is expected to remain at approximately 16% of net sales.

An interim dividend of €2.35 per share will be paid on July 25, 2025, with the final dividend subject to shareholder approval in October.

“We report a resilient Net Sales performance in a global macroeconomic and geopolitical environment which remains challenging and very fluid with regards to tariffs,” the company said in a statement.