Campari slips in the wake of Pernod Ricard’s results, with cautious guidance

(Il Sole 24 Ore Radiocor) - Campari slips (-1.8 per cent) on the Milan Stock Exchange in the wake of the results from its French rival, Pernod Ricard. Weighing on the share price are the results, announced this morning (Thursday 27 August) before the opening bell, of the French spirits producer Pernod Ricard, which fell by 4.6 per cent in Paris, dragging Remy Cointreau down with it. In detail, the Pernod Ricard group saw its annual profit fall by a quarter (-26%), to €1.2 billion, hampered by weakness in the US and Chinese markets, tariffs, rising costs and an unfavourable exchange rate effect. The French spirits giant, which is nevertheless seeing growth in other markets and has launched a cost-cutting programme, forecasts for the 2026/27 financial year – which does not coincide with the calendar year – ‘overall stable organic turnover, in a mixed and uncertain environment’. Turnover for the 2025/26 financial year fell by 14.2 per cent to 9.4 billion, although performance improved in the second half of the year. The figure is in line with analysts’ consensus forecasts.

Sales in the United States fell by 14 per cent: the group notes that the weakness in the US is ‘persistent’, with a slowdown in the spirits market against a backdrop of ‘economic moderation and subdued consumer confidence’. The decline was exacerbated by stock adjustments. In China, demand was ‘weak’, with sales falling by 19% due to low consumer sentiment and pressure on premium categories, particularly cognac, but the company assures that ‘an improvement in underlying trends is expected’. The group is, in fact, recovering from the effects of China’s temporary restriction on duty-free sales of cognac, introduced in response to European Union tariffs on Chinese electric vehicles. The company’s results were also affected by the impact of the conflict in the Middle East during the fourth quarter. The result was also adversely affected by a negative consolidation effect, following a number of disposals, and by exchange rate movements linked to the strength of the euro against the dollar, as well as against the Turkish lira and the Indian rupee.

In presenting its results, Pernod identified active portfolio management as a priority, including ‘M&A transactions capable of creating value’. Pernod then kept the dividend for 2026 unchanged at €4.70 per share and stated that it expects to complete an aggressive €1 billion restructuring programme a year ahead of schedule. Since the 2024 financial year, the company has cut around 3,600 jobs.

Looking ahead, the sales forecasts for the coming years are not optimistic and reinforce the indications provided by competitor Diageo, writes James Edwardes Jones of RBC Capital Markets in a note. The French spirits producer, owner of Absolut vodka and Jameson whisky, has stated that it expects annual sales growth to remain at the lower end of the previously indicated range (3 per cent to 6 per cent) until the 2029 financial year, due to weakness in the key US market. “We believe this partly reinforces the plan recently announced by Diageo, particularly the caution in its sales growth forecasts,” says Edwardes Jones. Diageo’s share price, however, fell by 2.1 per cent in London.