Pernod Ricard lowers FY25 outlook amid global tariff threats

Tariffs imposed by China and the United States could deal an estimated €200 million (£167m) blow to Pernod Ricard's business annually, finance chief Helene de Tissot said on Thursday.

China has already imposed temporary tariffs on European brandy imports, hurting Pernod's sales of its Martell cognac brand. The impact of tariffs, which could become permanent, forced Pernod to cut its outlook for 2025 and beyond on Thursday.

The world's second-largest spirits maker now anticipates a low single-digit decline in organic net sales.

US president Donald Trump has also threatened 25 per cent tariffs on goods from Mexico and Canada, as well as impose levies on the European Union, which would affect a range of Pernod products from Jameson Irish whiskey to Codigo 1530 tequila.

Altogether, assuming a 10 per cent US tariff on the EU, that could have an annual impact of €200m on Pernod, de Tissot told analysts on Thursday's results call, adding around €130-140m of that was related to Chinese cognac duties.

About 50 per cent of the total could be offset via mitigation measures, de Tissot continued, some of which have already been implemented in China.

Earlier this week Diageo, the world's top spirits maker, estimated an around $200m (£161m) blow from US tariffs for the last four months of its current financial year.

Pernod reported a 4 per cent organic sales decline in the first half of fiscal year 2025, with reported sales down 6 per cent to €6.17bn. While seeing sequential improvement in the second quarter and strong performances in some mature and emerging markets, the company cited a declining but improving US market and a continuing weak performance in China as key factors affecting results. Volume was up, but price/mix was down 6 per cent largely due to market mix, the company said.

Despite the sales decline, Pernod managed to expand its organic operating margin by 65 basis points in the first half, reaching 32.1 per cent.

Looking ahead, Pernod anticipates fiscal year 2026 will be a transition year with improving trends in organic net sales, conditional on the challenges posed by the global tariff environment. The company aims to defend its organic operating margin during this period and improve cash conversion. From fiscal year 2027 to 2029, Pernod projects stronger organic net sales growth, targeting an average range of 3 to 6 per cent, alongside organic operating margin expansion.

The company reiterated its commitment to maintaining consistent brand investment, targeting approximately 16 per cent of net sales for advertising and promotion, while remaining agile and responsive to market opportunities.

Pernod also plans to continue its efficiency initiatives, targeting approximately €1bn in savings from fiscal year 2026 to 2029.