Pernod Ricard - ADR

Q1 FY’25 headline performance: softer demand across key markets - Organic net sales: -5.9% (reported -8.5%); ex-Russia organic decline: -5%. - Drivers: weakness in China more severe than expected, also affecting Asia/retail; India impacted by sales phasing (expected to reverse in Q2); adverse European summer weather. - Volumes: stable; the decline was driven more by price/mix and negative market mix (price/mix FX: -6%), notably from U.S. and China.

Guidance/outlook maintained: modest organic growth + flat margins; China remains the main overhang - Management maintains full-year guidance: organic net sales back to growth, but probably modest, and organic operating margin sustained (flat). - China expectation worsened vs prior view: Q1 softer and China expected to be more negative for the full year than previously estimated (tariffs/weak consumption remain headwinds). - Other markets partially offset: expectation for U.S. to improve vs Q1 (sell-out normalizing; retailers managing inventory/promotions remain strong), India growth to re-accelerate in Q2, and rest of world (≈50% of sales) to be resilient; no more Russia impact.

Market-specific signals: growth pockets vs continued pressure - USA: net sales -10%; sell-out ~+1% (normalization), but retailer inventory adjustments and strong promotions persisted. Expect Q2 support via strong festive season marketing activation. - India: +2% in Q1; impacted by phasing, expected to fully reverse in Q2 with double-digit growth in Jameson and Seagram whiskeys (Royal Stag, Blenders Pride). Underlying sell-outs described as strong and ahead of industry. - China: -26% in Q1 (very weak consumer/trade traffic, downtrading on-trade; Mid-Autumn expected weak); Martell/Cognac and Scotch down, but premium brands gaining (e.g., Jameson, Beefeater, Kahlúa, Olmeca). - Europe: organic -3% but +1% excluding Russia; slowed by summer weather. - Travel retail (global): +3% with strong growth outside Asia. - Notable positive markets mentioned: Japan, Canada, Poland, Brazil, Turkey, Nigeria, plus strong travel retail in Americas/Europe. - Market share: claimed gains in 70%+ of main markets (including China and key India/Europe segments).