Pernod Ricard - Third quarter 2012/2013 sales: Good resilience of the business

  Pernod Ricard - Third quarter 2012/2013 sales: Good resilience of the
  business

Business Wire

PARIS -- April 25, 2013

Regulatory News:

Press release - Paris, 25 April 2013

                       Good resilience of the business

In summary

In the first nine months of the 2012/13 financial year Pernod Ricard
(Paris:RI) demonstrated good resilience of the business in a more challenging
macroeconomic environment, as had been announced at the beginning of the year,
and one which remains contrasted.

The premium portfolio remains the key driver of performance with:

  *continued sustained value growth^(1) of the strategic brands
  *very favourable price/mix (+6%^(1)) for the Top 14

Growth continues to be driven by emerging markets^(2) and  the United States:

  *growth^(1) remained strong in emerging markets^(2) (+10%^(1)), but slower
    compared to the prior financial year, particularly in Q3 2012/13. China
    (+11%^(1)), India (+17%^(1)) and Russia (+19%^(1)) remained the main
    growth drivers for the first nine months of financial year 2012/13.
  *continued solid growth^(1) in the United States
  *slight improvement in Q3 in Western Europe in a context that remains
    challenging
  *gradual improvement of the business in France, as anticipated. The base of
    comparison for the nine months at end March remains unfavourable. (French
    pre-buying remaining at end March 2012: €48 million)

Consolidated net sales reached €6,650million for the first nine months of the
2012/13 financial year. Reported growth was +5%, equating to +4% organic
growth with:

  *Top 14 up +6%^(1)(3)
  *emerging markets^(2) up +10%^(1) and mature markets stable^(1)(3)

On this occasion Chief Executive Officer of Pernod Ricard Pierre Pringuet
commented: “Pernod Ricard’s business demonstrated good resilience in, as
announced at the beginning of the year, a less favourable economic
environment. Our growth is still based on the same drivers: our policy of
premiumisation and innovation, the strategic brands and strong presence in
emerging markets and the United States.” He added: “Confident in the strength
of this model, we confirm our guidance of organic growth in profit from
recurring operations of close to +6% for the full financial year 2012/13.”

(1) Organic sales growth

(2) List of emerging markets provided in the appendix

(3) Excluding French pre-buying

The Pernod Ricard Board of Directors, meeting 24 April 2013 and chaired by
Danièle Ricard, reviewed the financial statements for the third quarter
2012/13.

Overall analysis: 9 months and third quarter

Pernod Ricard’s consolidated net sales (excluding taxes and duties) totalled
€6,650 million for the first nine months of the 2012/13 financial year (from
1 July 2012 to 31 March 2013), compared to €6,315 million in the same period
of the previous year. This +5% increase equates to:

  *organic growth of +4%
  *negative Group structure effect limited to -1%, primarily due to the
    disposal of certain Canadian activities in 2011/12 and Scandinavian
    activities in 2012/13
  *highly-favourable foreign exchange impact of +3%, primarily due to the US
    dollar and the Chinese renminbi

For the full 2012/13 financial year, the updated foreign exchange impact on
profit from recurring operations is estimated at approximately €25 million
(based on foreign exchange rates as of 17 April 2013, particularly EUR/USD =
1.29).

For the third quarter of the 2012/13 financial year, reported growth was +2%,
with:

  *organic growth of +6% (+3% excluding French pre-buying) impacted by
    slowdown in China (wholesaler depletions stable during Chinese New Year)
    compounded by significant shipments in the first half-year
  *Group structure limited to -1%, primarily due to the disposal of certain
    Scandinavian activities in 2012/13
  *unfavourable foreign exchange impact of -3%, primarily due to the Indian
    rupee, US dollar and Japanese yen

Detailed analysis by region

  *Asia/Rest of the World reported sustained growth, albeit at a more
    moderate pace, of +12% to €2,762 million (organic growth of +8%).
    Martell posted strong growth (+18%^(1)), bolstered by price/mix that
    remains very significant, and shipments to wholesalers in China that
    exceeded depletions. The slowdown in the third quarter was exacerbated by
    significant shipments in the half-year.
    Indian whiskies (+20%^(1)) are still dynamic due in particular to improved
    pricing and trading up.
    Scotch whiskies encountered continued weakness in Korea and Thailand and
    slowdown in China.
    Also to be noted is the strong performance of the new growth relays:
    Absolut and champagne (double-digit growth) as well as Jacob’s Creek.

  *China:

       *continued dynamic growth (+11%^(1)) despite a slowdown in the third
         quarter (stable Chinese New Year and significant shipments in the
         half-year)
       *on-going solid performance of Martell (boosted by shipments to
         wholesalers exceeding depletions) and new growth drivers (Jacob’s
         Creek, Absolut)
       *difficulties for Scotch whiskies in financial year 2012/13

  *India:

       *Indian whiskies (+17%^(1)): strong value growth and continued market
         share gains in the premium segment (the most dynamic and profitable)
       *Top 14 (+18%^(1)): rapid development of international brands driven
         by Chivas, Absolut, The Glenlivet and Ballantine’s

  *Duty Free: continued double-digit growth
  *South Korea:

       *continued modest increase in sales due to purchases ahead of price
         hikes in third quarter 2012/13
       *strong growth of Absolut driven by the development of the modern
         on-trade, but whiskey market still in down due to the structural
         decline of the traditional on-trade

  *Thailand: structural decline of 100 Pipers. Double-digit growth of Absolut
    and wine
  *Japan: good performance driven by Perrier-Jouët, Café de Paris and Jameson
  *Australia: slight decline^(1) but Top 14 up +6%^(1) with good development
    of Mumm and Absolut
  *Africa/Middle East (+12%^(1)): strong growth with good progression of the
    Top 14

  *In the Americas, solid growth was driven by the Premium^(4) brands. Net
    sales grew +7% to €1,708 million, representing +6% organic growth.
    The Top 14 (+7%^(1)) is a key growth driver (notably Jameson, The
    Glenlivet, Chivas and Malibu) with acceleration during the period and very
    favourable price-mix (+6%^(1)).
    Priority Premium Wines (+3%^(1)) confirmed their growth.
    The Key Local Brands (+8%^(1)) benefitted from double-digit growth of
    Passport and Something Special.

  *United States:solid growth (+7%^(1))

       *In a context of continued dynamic consumption (Nielsen^(5) and
         NABCA^(5) +4% in value for the Pernod Ricard portfolio) the Top 14
         (+8%^(1)) remains the main growth driver, benefitting from +4%^(1)
         price/mix.
       *The strategic brands confirm their good underlying trends^(6).
         Absolut (Nielsen +1.6%) confirms its growth (note that Elyx launches
         in April 2013); Jameson (Nielsen +23%) remains the main growth
         driver; Malibu (Nielsen +6%) is benefitting from numerous innovations
         driving its growth; Perrier-Jouët (Nielsen +7%) is showing very
         favourable price/mix and very good performance of Belle Epoque; The
         Glenlivet (Nielsen +15%) is exhibiting strong growth both in volumes
         and price/mix.

  *Brazil: slowdown in market growth

       *decline in shipments primarily due to application of tax reform
         concerning local VAT leading to wholesaler destocking
       *continued underlying growth of strategic brands (Nielsen^(7): Absolut
         +18%, Ballantine’s +7%, Chivas +7%)

  *Mexico: positive effects of the new business model

       *continued improvement in the trend (+6%^(1) vs. -12%^(1) in financial
         year 2011/12)
       *strong growth of the strategic brands (Top 14: +8%^(1)) essentially
         due to very favourable price/mix (+7%^(1))

  *Duty Free: renewed growth

       *the base of comparison has turned favourable (third quarter +11%^(1))
       *very favourable price/mix due to an ambitious policy of increasing
         prices (three price hikes in 18 months)

  *In Europe (excluding France) net sales of €1,662 million represent stable
    organic development.
    The Top 14 continues to grow (+2%^(1)) thanks to Jameson, Chivas, Havana
    Club, Beefeater and
    Absolut and despite the decline of Ballantine’s (very challenging whisky
    market in Spain) and of Mumm.
    Priority Premium Wines (+1%^(1)) are showing an improved trend.
    The Key Local Brands (-1%^(1)) are virtually stable thanks to renewed
    growth^(1) in Q3 for Ramazzotti in Germany (following resolution of a
    trade dispute that had impacted the HY1) and to double-digit growth^(1)
    for ArArAt and Olmeca in Russia which compensate the ongoing decline of
    Ruavieja and Becherovka in the difficult markets of Spain and Czech
    Republic respectively.

  *Eastern Europe: continued sustained growth (+11%^(1))

       *Russia: principal market contributing to growth (+19%^(1)) due to
         Jameson, ArArAt, Chivas, Olmeca and Ballantine’s. The favourable
         impact of pre-buying prior to price hikes on 1 April 2013 should be
         noted
       *Ukraine (+4%^(1)): good development of the Top 14 driven by Jameson,
         Absolut and Ballantine’s but slowdown in Q3 (unfavourable
         macro-economic environment)
       *Poland (+1%^(1)): renewed growth with improved trend for Wyborowa
       *Kazakhstan (+30%^(1)): strong development in this very promising
         market

  *Western Europe(-3%^(1)): slight improvement (third quarter stable^(1))

       *Southern Europe: situation remains challenging but improving slightly
         with a better performance in Spain (Nielsen: Pernod Ricard -3%)
       *Germany: continued double-digit growth of the Top 14 (partly enhanced
         by pre-buying ahead of increase in Havana Club prices at 1 April
         2013) and renewed growth in Q3 for Ramazzotti following resolution of
         a trade dispute that had impacted the HY1
       *Renewed growth in UK and Ireland

  *InFrancenet sales were €518 million, in decline ^ -5%^(1) excluding
    pre-buying.

       *Significant decline in sales (-13%^(1)), largely exacerbated by
         technical and conjonctural effects specified in the HY1 communication

            *base of comparison for the 9 months through end March remain
              unfavourable (effect of pre-buying remaining at end March 2012:
              € 48 million). Restated for this technical impact: -5%^(1)
            *certain promotional offers in HY1 2011/12 were not repeated in
              HY1 2012/13

       *Continued market share gains according to Nielsen data^(8)

            *Pernod Ricard -1% in a market down -2%
            *Ricard -2% in an aniseed market -4%

       *Excellent performance of several key brands according to Nielsen
         data^(8)

            *Absolut +14%
            *Havana Club +18%
            *Aberlour +10%

Detailed analysis by brand

The mix of growth remains favourable with Top 14 brands still developing at a
more rapid pace than the Group’s portfolio as a whole. Premium brands^(4)
represent 75% of sales for the 9 months to 31 March 2013:

  *The Top 14 remains the main growth driver (volumes stable^(1)(3) and net
    sales +6%^(1)(3))

       *Continued very favourable price/mix (+6%^(1))
       *Very good performance of Martell (+16%^(1), including +11%^(1) due to
         price/mix) boosted by shipments to wholesalers exceeding depletions
         in China
       *Excellent performance of Jameson (+16%^(1)), which continues to
         report double-digit growth in its principal markets (US, Russia,
         South Africa)
       *Good performance^(1) of white spirits

            *Absolut: improved price/mix and double-digit growth in Asia-RoW
            *Havana Club: good performance, improving from last financial
              year, enhanced by pre-buying ahead of price hikes in Germany on
              1 April 2013
            *Beefeater: remarkable growth, particularly in Spain, the US and
              Russia
            *Malibu: growth driven by innovations

       *Deceleration for Scotch whiskies in the 2012/13 financial year

            *slower growth in Asia and challenges in the Spanish market
            *but excellent price/mix on Chivas (+6%^(1)) and record growth
              for The Glenlivet (+21%^(1))

       *Decline^(1)  of Ricard due to reduced consumption in France (excise
         duty hike) exacerbated by technical effects
       *Decline^(1) of Mumm but growth^(1) of Perrier-Jouët thanks to greater
         international exposure

  *Good overall performance of the 18 key local brands (volumes +6% and net
    sales +6%^(1)(3)) with the continued dynamism of the Indian whiskies
    +20%^(1) which outperform the market in value, of Passport +23%^(1),
    ArArAt +17%^(1) and Olmeca +14%^(1). At the same time there were declines
    of Pastis 51 and Clan Campbell (exacerbated by pre-buying in France) as
    well as of 100Pipers (-14%^(1)).
  *Premium Priority Wines (volumes stable and net sales +3%^(1)) continue
    their high-value strategy and geographic diversification with +3%^(1)
    price/mix, net sales +17%^(1) in Asia and renewed growth in Europe.

Conclusion and outlook FY 2012/13Pernod Ricard’s business showed good
resilience in a less favourable macroeconomic environment, as announced at the
beginning of the year:The Group continues to benefit from the same growth
drivers:

  *Premiumisation and Innovation
  *Top 14 and Indian whiskies
  *Emerging markets^(2) and the United States

Pernod Ricard confirms its guidance of organic growth in profit from recurring
operations close to +6% for the full financial year 2012/13.

(1) Organic sales growth
(2) List of emerging markets provided in the appendix
(3) Excluding French pre-buying
(4) US retail price > USD 17 for spirits and > USD 5 for wines
(5) In value 12 weeks to 12 March 2013
(6) In value from 1 July 2012 to 30 March 2013
(7) In volume since the start of the 2012/13 financial year
(8) In volume 1 July 2012 to 24 March 2013

Pernod Ricard is the world’s co-leader in wines and spirits with consolidated
sales of € 8,215 million in 2011/12. Created in 1975 by the merger of Ricard
and Pernod, the Group has undergone sustained development, based on both
organic growth and acquisitions: Seagram (2001), Allied Domecq (2005) and Vin
& Sprit (2008). Pernod Ricard holds one of the most prestigious brand
portfolios in the sector: ABSOLUT Vodka, Ricard pastis, Ballantine’s, Chivas
Regal, Royal Salute and The Glenlivet Scotch whiskies, Jameson Irish whiskey,
Martell cognac, Havana Club rum, Beefeater gin, Kahlúa and Malibu liqueurs,
Mumm and Perrier-Jouët champagnes, as well Jacob’s Creek, Brancott Estate
(formerly Montana), Campo Viejo and Graffigna wines. Pernod Ricard employs a
workforce of nearly 18,800 people and operates through a decentralised
organisation, with 6 “Brand Companies” and 75 “Market Companies” established
in each key market. Pernod Ricard is strongly committed to a sustainable
development policy and encourages responsible consumption. Pernod Ricard’s
strategy and ambition are based on 3 key values that guide its expansion:
entrepreneurial spirit, mutual trust and a strong sense of ethics.

Pernod Ricard is listed on the NYSE Euronext exchange (Ticker: RI; ISIN code:
FR0000120693) and is a member of the CAC 40 index.

                         Appendices 9 months 2012/13

Analysis of sales by region

Net Sales
           HY1 2011/12     HY1 2012/13     Change        Organic       Group       Forex
(€                                                           Growth         Structure    impact
millions)
                                                                              
France      517    11.2%    374    7.6%     (143)  -28%   (143)  -28%   (0)   0%    0     0%
Europe
excl.       1,232   26.7%    1,245   25.4%    14      1%     (7)     -1%    (4)    0%    24     2%
France
Americas    1,166   25.3%    1,282   26.1%    116     10%    73      6%     (32)   -3%   75     6%
Asia /
Rest of     1,699  36.8%    2,005  40.9%    307    18%    193    11%    (4)   0%    118   7%
the World
World       4,614  100.0%   4,907  100.0%   293    6%     116    3%     (40)  -1%   216   5%
                                                                                                
                                                                              
Net Sales
            Q3 2011/12       Q3 2012/13       Change         Organic        Group        Forex
(€                                                           Growth         Structure    impact
millions)
                                                                              
France      78      4.6%     144     8.3%     67      86%    67      86%    (0)    0%    0      0%
Europe
excl.       424     25.0%    417     23.9%    (7)     -2%    6       2%     (9)    -2%   (4)    -1%
France
Americas    423     24.9%    425     24.4%    2       1%     18      4%     2      0%    (18)   -4%
Asia /
Rest of     776    45.6%    756    43.4%    (19)   -3%    13     2%     (5)   -1%   (28)  -4%
the World
World       1,701  100.0%   1,743  100.0%   42     2%     104    6%     (12)  -1%   (50)  -3%
                                                                                                
                                                                              
Net Sales   YTD March        YTD March
                                              Change         Organic        Group        Forex
(€          2011/12          2012/13                         Growth         Structure    impact
millions)
                                                                              
France      595     9.4%     518     7.8%     (77)    -13%   (77)    -13%   (0)    0%    0      0%
Europe
excl.       1,656   26.2%    1,662   25.0%    6       0%     (0)     0%     (13)   -1%   19     1%
France
Americas    1,589   25.2%    1,708   25.7%    118     7%     91      6%     (30)   -2%   57     4%
Asia /
Rest of     2,474  39.2%    2,762  41.5%    287    12%    206    8%     (9)   0%    90    4%
the World
World       6,315  100.0%   6,650  100.0%   335    5%     220    4%     (52)  -1%   167   3%
                                                                                                

Organic sales growth of the Top 14 brands

                Net Sales organic
                                  Volume growth  Price/mix
                growth
                                                 
Absolut         3%                  1%              3%
Chivas Regal    3%                  -3%             6%
Ballantine's    -7%                 -6%             -1%
Ricard          -17%                -18%            1%
Jameson         16%                 9%              6%
Malibu          1%                  0%              1%
Beefeater       6%                  3%              3%
Kahlua          0%                  -4%             3%
Havana Club     5%                  4%              1%
Martell         16%                 5%              11%
The Glenlivet   21%                 17%             4%
Royal Salute    -3%                 -6%             3%
Mumm            -4%                 -5%             1%
Perrier-Jouët   6%                  -2%             8%
Top 14          5%                  -1%             6%
                                                    

Foreign exchange impact

Forex impact YTD March 2012/13  Average rates evolution    On Net Sales
(€ millions)                     2011/12  2012/13  %
                                                     
US dollar                USD    1.36     1.29     -5.0%   75
Chinese yuan              CNY    8.63      8.09      -6.3%   54
Korean won                KRW    1.52      1.42      -6.4%   14
Pound sterling            GBP    0.86      0.82      -4.6%   14
Australian dollar         AUD    1.31      1.24      -5.0%   9
Canadian dollar           CAD    1.36      1.29      -5.2%   9
Mexican peso              MXN    17.59     16.65     -5.3%   7
New Zealand dollar        NZD    1.68      1.57      -6.6%   5
Thai baht                 THB    41.66     39.46     -5.3%   5
Russian ruble             RUB    40.93     40.15     -1.9%   4
Taiwan dollar             TWD    40.28     37.99     -5.7%   4
Swedish krone             SEK    9.03      8.52      -5.7%   3
Malaysian ringgit         MYR    4.17      3.98      -4.7%   3
Singapourian dollar       SGD    1.71      1.59      -6.7%   3
Hong Kong dollar          HKD    10.56     10.00     -5.3%   2
Japanese yen              JPY    106.00    108.48    2.3%    (2)
South african rand        ZAR    10.39     11.15     7.3%    (5)
Argentinian peso          ARS    5.77      6.20      7.6%    (6)
Brazilian real            BRL    2.35      2.61      11.3%   (13)
Indian rupee              INR    66.36     70.27     5.9%    (25)
Other currencies                                      7
Total                                                 167
                                                             

Group structure effect

Group structure YTD March

2012/13                    On Net Sales

(€ millions)
                           
Canadian activities         (10)
Scandinavian activities     (8)
Other                       (34)
Total Group Structure       (52)
                            

Emerging markets

Asia-Rest of World                Americas              Europe
Algeria        Malaysia        Argentina             Albania
Angola            Maldives           Bolivia                  Armenia
Cambodia          Mauritius          Brazil                   Azerbaijan
Cameroon          Morocco            Caribbean                Balkans
China             Mozambique         Chile                    Belarus
Congo             Nigeria            Colombia                 Bosnia
Egypt             Persian Gulf       Costa Rica               Bulgaria
Ethiopia          Philippines        Cuba                     Croatia
Gabon             Saudi Arabia       Dominican Republic       Georgia
Ghana             Senegal            Ecuador                  Hungary
India             South Africa       Guatemala                Kazakhstan
Indonesia         Sri Lanka          Honduras                 Latvia
Iran              Syria              Mexico                   Lithuania
Iraq              Tanzania           Panama                   Macedonia
Ivory Coast       Thailand           Paraguay                 Moldova
Jordan            Tunisia            Peru                     Poland
Kenya             Turkey             Puerto Rico              Romania
Laos              Uganda             Uruguay                  Russia
Lebanon           Vietnam            Venezuela                Ukraine
Madagascar
                                                              

Contact:

Pernod Ricard
Jean Touboul, +33 (0)1 41 00 41 71
Financial Communication – Investor Relations VP
or
Alison Donohoe, +33 (0)1 41 00 42 14
Investor Relations
or
Carina Alfonso Martin, +33 (0)1 41 00 43 42
Press Relations Manager, External Communications
 
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