France’s Pernod Ricard announced a 1% decline in full-year organic sales on Thursday, a result that aligns with both its forecasts and earlier guidance despite significant challenges in its major markets, the US and China.
The world’s second-largest Western spirits producer maintained its annual forecast in April, despite experiencing setbacks in its two largest markets. The company had anticipated a rebound in demand in the fourth quarter.
In detail, Pernod’s net sales in the US fell by 9%, while sales in China dropped by 10%. Despite these declines, the company saw recovery in most other markets during the second half of the year, with notable growth in India, where sales increased by 6%. This overall performance enabled Pernod to meet its goal of ending the year with nearly stable net sales, surpassing the anticipated 1.2% decline.
Chairman and CEO Alexandre Ricard remarked that the company achieved “robust results… within an environment of economic and geopolitical uncertainty.”
The spirits industry, including Pernod, has faced difficulties as the post-pandemic surge in high-end spirits sales has reversed, impacted by high interest rates, inflation, and other economic challenges. Pernod, in particular, has seen a reduction in sales as US retailers and wholesalers reduced their stock of premium spirits in response to lower demand. In China, economic troubles have also dampened consumer confidence and sales.
Looking ahead, Pernod expects a “soft” first quarter of 2025, influenced by ongoing US inventory adjustments and a challenging economic environment in China. However, the company is optimistic about performance in other regions, anticipating a return to net sales growth.
Pernod Ricard also projects that it will maintain its organic operating margin, which expanded by 80 basis points during the 2024 financial year due to higher pricing and controlled spending. Profit from recurring operations grew by 1.5%, exceeding estimates.
For the medium term, Pernod remains confident in achieving approximately 7% organic net sales growth. The company proposed a dividend of 4.70 euros per share, unchanged from the previous year.
