Excluding the U.S. and Chinese markets, which contracted by -12% and -7% respectively this quarter, revenue for the Rest of the World posted robust organic growth of 5% in Q3.

Revenue improved during this period across markets in all regions, driven by strong momentum in emerging markets and continued growth in several mature markets.

Furthermore, nine-month revenue for the current fiscal year stands at 7.199 billion euros, down 4.4% organically and 14.8% on a reported basis. This includes a negative currency impact of -515 million euros—primarily due to the U.S. dollar, the Indian rupee, and the Turkish lira—and a perimeter effect of -393 million euros, mainly related to the disposal of the wine business and the Imperial Blue division.

Capital expenditure revised downward

Regarding the outlook, Pernod Ricard now anticipates an organic revenue decline of between -3% and -4% for the full year, citing the ongoing conflict in the Middle East.

The wine and spirits group continues to invest to "enhance brand desirability through optimized resource allocation, increased efficiency, innovation, and experiences, while maintaining an A&P ratio of approximately 16%."

The company is preserving its organic operating margin as much as possible, notably through strict cost control and the execution of its 1 billion euro 2026-2029 operational efficiency program. The group expects to achieve one-third of this efficiency program by the end of fiscal year 2025/2026.

Its objective is also to continue delivering strong cash generation, with strategic capital expenditure now revised to 700 million euros (down from 750 million euros previously) and an optimization of working capital requirements.

Pernod Ricard targets a cash conversion rate of approximately 80% or more starting from fiscal year 2025/26 and anticipates a significantly negative currency impact.

In the medium term, between fiscal years 2026/2027 and 2028/2029, the group expects organic revenue growth to improve to an average range of 3% to 6% per year, alongside an expansion of its organic operating margin. This growth will be supported by 1 billion euros in efficiency measures between 2025/2026 and 2028/2029. It anticipates strong cash generation, aiming for a conversion ratio of approximately 80% and above to fund its financial policy priorities, including strategic investments normalizing at a maximum of approximately 800 million euros per year.

The group also aims to reduce its leverage and bring its net debt/EBITDA ratio below 3 by fiscal year 2028/2029.