Pernod Ricard hailed a “very strong” annual performance as it recorded double-digit sales growth and expanded margin, but shares were hit by warnings of slowdowns in key markets of China and the US.

The group’s full-year sales for the year to 30 June were up 10% organically to €12.1bn, with reported sales growth up 13% as it benefited from the dollar’s appreciation against the euro.

The spirits giant saw growth across all regions. The Americas were up 2% amid “stable” US sales, Europe was up 8% thanks to strong growth in Spain, Germany and travel retail, while Asia and the rest of the world was up 17%, led by India.

All spirits categories delivered strong growth. Its key strategic international brands were up 11% led by Scotch, Martell, Jameson and Absolut. Strategic local brands were up 10% and speciality brands by 8%, but wines saw a 2% drop.

Overall growth was largely driven by pricing, with price/mix up 9% and pricing itself up 8% in the period. However, volumes remained resilient, growing 1%.

Full-year profit from recurring operations was up 11% to €3.3bn as it sustained organic gross margin and expanded organic operating margin thanks to premiumisation, revenue growth management and operational efficiencies.

The group reiterated its medium-term outlook to 2025, aiming for the upper end of 4% to 7% net sales growth and a 50bps-60bps expansion in operating margin.

However, it expects a “soft” start to the current financial year, amplified by high comparatives from its 2022-23 financial year.

Most notably, it pointed to a “challenging environment” in China, which had led to a drop in first-quarter net sales. Sales are also expected to drop in Q1 in the US amid tough comparatives.

The group’s shares sank 4.5% in early trading on Thursday back to €185.55, their lowest level since January.

Bernstein welcomed the “strong set of results”, while noting the commentary of a soft start in Q1, and said expected sales declines in both the US and China “might weigh on sentiment”.

Jefferies noted that organic earnings were ahead of street expectations, but foreign exchange “was a bigger than expected drag” and drove a 2.5% miss of earnings per share. The broker said: “We expect shares to be weaker initially on the EPS miss and commentary of soft start. We would use weakness to buy into an attractive med-term top and bottom line growth story.”

Pernod Ricard shares are up 1% year on year, but down by around 15% since an all-time high of €218 in April 2023.

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