17 April 2025
If you are covering Pernod Ricard’s latest results, please see the following comment from Chris Beckett, head of equity research at Quilter Cheviot:
“Pernod Ricard’s Q3 update came with plenty of moving parts—front-loaded inventory in the US, the timing of Easter in Europe, and customs phasing in India all distorted the picture. But the real message is that it could have been worse.
Sales modestly missed expectations, but the market reaction has been muted, reflecting a sense that the worst of the post-Covid normalisation period may now be behind us. The US market, crucially, is being described by management as ‘stable’—which in today’s environment is a relative positive—and the Chinese market, while still soft, has improved from far steeper declines seen in prior quarters.
There’s also a level of confidence shown in the flat interim dividend and reiterated full-year guidance, despite a lot of external noise. If tariffs on European spirits exports to the US remain at 10%, management believes it can absorb the impact. But if we see an escalation, particularly to 20% or more affecting Cognac and Irish Whiskey, then downgrades would be on the cards.
In valuation terms, the company continues to trade well below its long-term premium to the staples sector. Spirits businesses have historically commanded a significant multiple, and at current levels, that premium is materially compressed. For long-term investors, that gap may represent an opportunity if market sentiment continues to stabilise.”
