On the positive side, the key points to remember are that margins have been maintained and, above all, the dividend has been kept at its generous level.
Otherwise, there is not much to celebrate. The group's three geographical segments—Europe, the Americas, and Asia & Rest of the World—each posted 4%, 6%, and 7% respective declines in revenue.
Consolidated revenue fell by 6% and profit from continuing operations was down 5%. Appearances are saved by a cut in advertising budgets, which will save Pernod almost €200m this year.
At nearly €100m, the free cash flow of €1.1bn does not fully cover its dividend distribution. Added to this is an unfavorable exchange rate effect, which is forcing Pernod to significantly lower its solvency ratio.
Regarding this same free cash flow, one can only smile at the amount presented by the group to analysts, as it includes $200m in expenses dubbed "non-recurring"... even though they were exactly the same last year.
Pernod Ricard will have to deal with significant refinancing each year until 2032. The very competitive rates obtained in the past—particularly between 2016 and 2022—will not return. In this respect, interest expenses are expected to increase, and pressure on cash flows could well intensify.
It is clearly with this in mind that the group is focusing its communication on its ability to generate stable free cash flow, both through a reduction in its "strategic" investments – notably the aging of its casks – and through a cost-saving program.
That said, over the long term, Pernod Ricard will generate exactly the same cash profit in 2025 as it did ten years earlier. Pessimists will consider this a major underperformance, especially if this figure is adjusted for inflation.
It is therefore logical that the share price has returned to the level it was at at the time. In the absence of growth, the market capitalization of €25bn seems fairly generous.
