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1. Company Snapshot

1.a. Company Description

Pernod Ricard SA produces and sells wines and spirits worldwide.It offers its products under various brands.The company was founded in 1805 and is headquartered in Paris, France.

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1.b. Last Insights on RI

Pernod Ricard's recent performance was driven by several positive factors. The company's decision to sell its Imperial Blue whisky business to Tilaknagar Industries for $486 million is expected to be "immediately and meaningfully accretive" to Pernod Ricard India's operating margin and net sales growth rate. This strategic move enables the company to focus on premium labels and optimize its portfolio. Additionally, the company's packaging innovations, such as Absolut's fiber packaging, demonstrate its commitment to sustainability and customer satisfaction. Furthermore, the proposed appointments to the Pernod Ricard Board suggest a renewed focus on governance and leadership.

1.c. Company Highlights

2. Pernod Ricard's FY '25 Earnings: A Resilient Performance

Pernod Ricard's fiscal year '25 sales and results have delivered a resilient performance, with organic margin expansion despite a challenging environment. Net sales were down 3% organically and 6% in reported terms, impacted by currency effects. However, the company's operating margin trajectory is strongly expanding, with a 64% increase in organic operating margin. Earnings per share (EPS) came in at €2.21, beating estimates of €1.87. The company's free cash flow improved by €170 million, reaching €1.133 billion, with strong operating working capital management.

Publication Date: Aug -29

📋 Highlights
  • Organic Operating Margin Expansion:: Rose 64% YoY, driven by EUR 900 million in operational efficiencies and cost discipline.
  • Free Cash Flow Growth:: Reached EUR 1.133 billion, up 18%, aided by improved operating working capital management and reduced CapEx by EUR 110 million.
  • Volume Recovery:: Achieved 2% volume growth for FY '25, marking three consecutive semesters of expansion despite net sales declining 3% organically.
  • Geographic Diversification:: Americas (ex-U.S.) grew 2%, Rest of World/Asia rose 3%, offsetting declines in China and U.S. markets.
  • Sustainability & Efficiency:: EUR 900 million savings from 2023–2025 efficiency programs, with 20% allocated to protect margins against FY '26 headwinds like tariffs.

Regional Performance

The company's broad-based and balanced geographic footprint helped mitigate declines in certain regions. Americas excluding the U.S. were up 2%, Europe excluding Russia was flat, and the Rest of the World and Asia were up 3%. The company's diversified portfolio posted strong performances across all regions, with a focus on premium spirits.

Operational Efficiencies

Pernod Ricard completed €900 million of operational efficiencies, with a strong cost discipline leading to margin expansion. As Helene de Tissot, CFO, noted, "We've successfully completed our Fit for Future and operational efficiencies program, which represents €900 million efficiencies delivered between '23 and fiscal year '25." The company's efficiency program is expected to continue into fiscal year '26, helping to offset headwinds.

Outlook and Valuation

Looking ahead, Pernod Ricard expects a transition year with improving top-line trends, margin expansion, and cash conversion improvement. The company aims for organic net sales growth of 3% to 6% per annum, with annual organic operating margin expansion. With a current P/E Ratio of 22.3 and a Dividend Yield of 4.84%, the company's valuation appears reasonable, reflecting its resilient performance and growth prospects.

Challenges and Opportunities

Pernod Ricard faces headwinds, including tariffs and minimum pricing in China, but is well-positioned to navigate these challenges. The company's diversified portfolio and geographic breadth provide a solid foundation for long-term growth. With a focus on cash generation and a cash conversion ratio target of circa 80%, Pernod Ricard is poised to deliver value-accretive and cash-generative growth.

3. NewsRoom

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United States Non-GMO Food Market Report 2025-2033, Profiles of Amy's Kitchen, Blue Diamond Growers, Organic Valley, Hain Celestial, Nestle, Kellogg's, PepsiCo, Pernod Ricard, Clif Bar, Danone

Nov -26

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This 'Shark Tank' Startup Did $95 Million In Sales Last Year. Its Founders Say They Bootstrapped Their Success

Nov -24

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PERRO VERDE, the Leading Sipping Mezcal on the Market, Announces Strategic Advisory Committee to Support Explosive Growth

Nov -19

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Alcohol Stocks Take $830 Billion Hit as Drinking Habits Change

Oct -30

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Can Pernod Ricard’s (ENXTPA:RI) Debt Issuance and Board Moves Reshape Its Capital Allocation Strategy?

Oct -30

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Is Pernod Ricard an Opportunity After Asia-Pacific Partnership and Share Price Recovery?

Oct -29

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Pernod Ricard makes exec new CEO of Canadian business

Oct -29

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Pernod Ricard Successfully Completes €1.2 Billion of Bond Issuance

Oct -29

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.50%)

6. Segments

Wines and Spirits Sales

Expected Growth: 3.7%

The expected growth rate of 3.7% for 'Wines and Spirits Sales' is slightly above the global average, reflecting the segment's potential for growth driven by premium brands and increasing demand in emerging markets. The growth is supported by the continued popularity of luxury spirits and the company's strong brand portfolio. Market trends and consumer preferences towards premium products are expected to drive this growth. Effective marketing and distribution strategies will be key to achieving this growth rate.

7. Detailed Products

Absolut Vodka

A premium vodka brand made from Swedish winter wheat, known for its crisp, clean taste and versatility in cocktails.

Chivas Regal Scotch Whisky

A premium Scotch whisky brand offering a range of blends and ages, known for its smooth, rich flavor and luxurious packaging.

Jameson Irish Whiskey

A triple-distilled Irish whiskey brand known for its smooth, approachable flavor and affordable price point.

Malibu Rum

A coconut-flavored rum brand popular for its sweet, creamy flavor and versatility in tropical cocktails.

G.H. Mumm Champagne

A prestige champagne brand known for its high-quality grapes and elegant, refined flavor profile.

Jacob's Creek Wine

A popular Australian wine brand offering a range of varietals and blends, known for its approachable flavor and affordable price point.

Kahlúa Coffee Liqueur

A coffee-flavored liqueur brand popular for its rich, velvety texture and versatility in coffee-based cocktails.

Havana Club Rum

A Cuban rum brand known for its rich, full-bodied flavor and heritage in traditional Cuban cocktails.

8. Pernod Ricard SA's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Pernod Ricard SA is medium, as there are some alternatives to wine and spirits, but they are not perfect substitutes. The company's strong brand portfolio and distribution network help to mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low, as Pernod Ricard SA has a diverse customer base and no single customer accounts for a significant portion of its revenue.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium, as Pernod Ricard SA relies on a network of suppliers for grapes, grains, and other raw materials. However, the company's scale and global presence help to mitigate this threat.

Threat Of New Entrants

The threat of new entrants is low, as the wine and spirits industry has high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high, as Pernod Ricard SA operates in a highly competitive industry with several large players, including Diageo, Bacardi, and Brown-Forman.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.22%
Debt Cost 3.95%
Equity Weight 57.78%
Equity Cost 6.21%
WACC 5.26%
Leverage 73.08%

11. Quality Control: Pernod Ricard SA passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Imperial Brands

A-Score: 7.7/10

Value: 5.8

Growth: 5.3

Quality: 6.3

Yield: 9.4

Momentum: 9.5

Volatility: 9.7

1-Year Total Return ->

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Ahold Delhaize

A-Score: 6.9/10

Value: 7.1

Growth: 5.8

Quality: 5.0

Yield: 6.2

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

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Coca-Cola Europacific Partners

A-Score: 6.0/10

Value: 3.6

Growth: 6.0

Quality: 5.0

Yield: 6.2

Momentum: 10.0

Volatility: 5.0

1-Year Total Return ->

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Henkel

A-Score: 5.6/10

Value: 6.0

Growth: 4.1

Quality: 6.9

Yield: 5.0

Momentum: 1.5

Volatility: 10.0

1-Year Total Return ->

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Diageo

A-Score: 5.1/10

Value: 4.2

Growth: 5.6

Quality: 6.1

Yield: 6.2

Momentum: 0.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Pernod Ricard

A-Score: 4.5/10

Value: 4.6

Growth: 3.3

Quality: 5.6

Yield: 6.2

Momentum: 0.0

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

76.88$

Current Price

76.88$

Potential

-0.00%

Expected Cash-Flows