Pernod Ricard: 2013/14 Half-Year Sales and Results

  Pernod Ricard: 2013/14 Half-Year Sales and Results

          Sales virtually stable and slight increase in PRO^1 in HY1
                 (excluding forex impact and Group structure)

                         New guidance for FY 2013/14:
                  Organic growth in PRO between +1% and +3%

Business Wire

PARIS -- February 13, 2014

Regulatory News:

Press release - Paris, 13 February 2014

Pernod Ricard (Paris:RI):

Net sales for the first semester of 2013/14 totalled €4,570 million.
Excluding forex impact and Group structure sales were virtually stable,
reflecting an improvement in the second quarter (+2%) over the first (-1%).
Due to a highly unfavourable forex impact, reported net sales growth was -7%.

Sales were mainly impacted by one market, China (-18%):

  *Asia-RoW excluding China +2%
  *very good performance in Europe (+4%)
  *return to growth in Americas (+3%) following a strong second quarter

Top 14 was virtually stable despite a mix effect of -4% (decline of Martell in
China). Volumes were stable and pricing remained positive. The second quarter
showed a return to growth. Key local brands performed well (+4%) despite the
decline (primarily technical) of Imperial.

Operating margin improved (+34bps), thanks to strict control of resources,
leading to organic growth in Profit from Recurring Operations of +2% at
€1,359 million.

As announced, the highly unfavourable forex impact (€-112million on PRO at
end December) affected the reported growth in Profit from Recurring Operations
(-7%).

Financial expenses on recurring operations were reduced by -19% thanks to a
significant reduction in the cost of debt to 4.6% (vs. 5.4% in HY1 2012/13).

Net profit from recurring operations declined -3%. Excluding forex impact, it
grew +6%.

At end December, debt was reduced €-102million to €8.6 billion.

This announcement provided Pierre Pringuet, Chief Executive Officer of Pernod
Ricard, with the opportunity to state: “We remain confident in the medium and
long-term potential of China but we anticipate difficulties to persist for the
full financial year. We want to prioritize the Group’s future sales growth
through a sound commercial policy and an appropriate level of investment. As a
result, we are issuing new guidance for FY 2013/14: organic growth in profit
from recurring operations between +1% and +3%.”

Pierre Pringuet also announces the launch of Allegro, a project aimed at
delivering further operational efficiency: “We want to improve organisational
efficiency in order to generate future growth, seize new opportunities
(particularly innovation and digital) and increase the speed of execution. We
will continue to rely on our decentralised model, based on the direct
relationship between Brand Companies and Market Companies.”

From a financial standpoint, this project will generate €150million of
annual savings over three years. They will be partly reinvested to support
brand development.

A detailed presentation of sales for the first semester of 2013/14 can be
downloaded from our website: www.pernod-ricard.com

Limited audit procedures have been carried out on the half-year financial
statements. Half-year financial report related to this press release is being
prepared and will be available on our website www.pernod-ricard.com.

Note: All growth data specified in this press release refers to organic
growth, unless otherwise stated.

France is now included in the Europe operating segment.

About Pernod Ricard

Pernod Ricard is the world’s co-leader in wines and spirits with consolidated
sales of €8,575 million in 2012/13. 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,
Campo Viejo and Graffigna wines. Pernod Ricard employs a workforce of nearly
19,000 people and operates through a decentralised organisation, with 6 “Brand
Companies” and 80 “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.

^1 Profit from recurring operations

                                  Appendices

Sales analysis by region (new operating segments)

                                                                           
Net Sales                                                    Organic      Group        Forex
(€          Q1 2012/13       Q1 2013/14       Change         Growth       Structure    impact
millions)
Europe      674    30.6%    666    33.1%    (7)    -1%    21    3%    (15)  -2%   (13)   -2%
Americas    579     26.3%    532     26.4%    (47)    -8%    2      0%    (1)    0%    (48)    -8%
Asia /
Rest of     951    43.2%    814    40.5%    (137)  -14%   (55)  -6%   (7)   -1%   (74)   -8%
the World
World       2,203  100.0%   2,013  100.0%   (191)  -9%    (32)  -1%   (22)  -1%   (136)  -6%
                                                                                               
                                                                             
Net Sales                                                    Organic      Group        Forex
(€          Q2 2012/13       Q2 2013/14       Change         Growth       Structure    impact
millions)
Europe      946     35.0%    946     37.0%    0       0%     38     4%    (19)   -2%   (19)    -2%
Americas    703     26.0%    677     26.5%    (26)    -4%    39     6%    (1)    0%    (63)    -9%
Asia /
Rest of     1,054  39.0%    934    36.5%    (120)  -11%   (27)  -3%   (5)   -1%   (87)   -8%
the World
World       2,703  100.0%   2,558  100.0%   (145)  -5%    50    2%    (25)  -1%   (170)  -6%
                                                                                               
                                                                             
Net Sales                                                    Organic      Group        Forex
(€          HY1 2012/13      HY1 2013/14      Change         Growth       Structure    impact
millions)
Europe      1,619   33.0%    1,612   35.3%    (7)     0%     59     4%    (33)   -2%   (33)    -2%
Americas    1,282   26.1%    1,209   26.5%    (73)    -6%    41     3%    (2)    0%    (112)   -9%
Asia /
Rest of     2,005  40.9%    1,749  38.3%    (256)  -13%   (82)  -4%   (12)  -1%   (162)  -8%
the World
World       4,907  100.0%   4,570  100.0%   (336)  -7%    18    0%    (48)  -1%   (306)  -6%
                                                                                               

NB: France is now included in the Europe operating segment

Sales analysis by region (former operating segments)

                                                                         
Net Sales                                                    Organic      Group        Forex
(€          Q1 2012/13       Q1 2013/14       Change         Growth       Structure    impact
millions)
France      149    6.8%     156    7.8%     7      5%     7     5%    (0)   0%    0      0%
Europe
excl.       524     23.8%    510     25.3%    (14)    -3%    13     3%    (14)   -3%   (13)    -3%
France
Americas    579     26.3%    532     26.4%    (47)    -8%    2      0%    (1)    0%    (48)    -8%
Asia /
Rest of     951    43.2%    814    40.5%    (137)  -14%   (55)  -6%   (7)   -1%   (74)   -8%
World
World       2,203  100.0%   2,013  100.0%   (191)  -9%    (32)  -1%   (22)  -1%   (136)  -6%
                                                                                               
                                                                             
Net Sales                                                    Organic      Group        Forex
(€          Q2 2012/13       Q2 2013/14       Change         Growth       Structure    impact
millions)
France      225     8.3%     241     9.4%     16      7%     17     7%    (1)    0%    0       0%
Europe
excl.       721     26.7%    705     27.6%    (16)    -2%    22     3%    (18)   -3%   (19)    -3%
France
Americas    703     26.0%    677     26.5%    (26)    -4%    39     6%    (1)    0%    (63)    -9%
Asia /
Rest of     1,054  39.0%    934    36.5%    (120)  -11%   (27)  -3%   (5)   -1%   (87)   -8%
World
World       2,703  100.0%   2,558  100.0%   (145)  -5%    50    2%    (25)  -1%   (170)  -6%
                                                                                               
                                                                             
Net Sales                                                    Organic      Group        Forex
(€          HY1 2012/13      HY1 2013/14      Change         Growth       Structure    impact
millions)
France      374     7.6%     397     8.7%     23      6%     24     6%    (1)    0%    0       0%
Europe
excl.       1,245   25.4%    1,215   26.6%    (30)    -2%    35     3%    (32)   -3%   (33)    -3%
France
Americas    1,282   26.1%    1,209   26.5%    (73)    -6%    41     3%    (2)    0%    (112)   -9%
Asia /
Rest of     2,005  40.9%    1,749  38.3%    (256)  -13%   (82)  -4%   (12)  -1%   (162)  -8%
World
World       4,907  100.0%   4,570  100.0%   (336)  -7%    18    0%    (48)  -1%   (306)  -6%
                                                                                               

Top 14 brands organic sales growth

                                  
Top 14          Net Sales^*   Volumes   Price/mix
Absolut         1%            -3%       4%
Chivas Regal    -4%           -8%       4%
Ballantine's    -4%           2%        -6%
Ricard          9%            8%        1%
Jameson         16%           13%       3%
Havana Club     4%            2%        3%
Malibu          -3%           -4%       1%
Beefeater       3%            4%        -1%
Kahlua          -1%           -1%       0%
Martell         -8%           -8%       -1%
The Glenlivet   10%           1%        9%
Royal Salute    -11%          -10%      -1%
Mumm            -1%           -2%       1%
Perrier-Jouët   9%            0%        9%
Top 14          -1%           0%        -1%
                                        

* Organic growth

Profit from recurring operations by region (new operating segments)

World                                                                                 
                                                                                 
(€ millions)   HY1 2012/13      HY1 2013/14      Change         Organic       Group        Forex impact
                                                                Growth        Structure
Net sales      4,907   100.0%   4,570   100.0%   (336)   -7%    18     0%     (48)   -1%   (306)   -6%
(Excl. T&D)
Gross margin
after          3,096   63.1%    2,909   63.6%    (188)   -6%    21     1%     (12)   0%    (197)   -6%
logistics
costs
Advertising    (888)   18.1%    (821)   18.0%    67      -8%    21     -2%    2      0%    45      -5%
& promotion
Contribution   2,208  45.0%    2,088  45.7%    (120)  -5%    42    2%     (10)  0%    (152)  -7%
after A&P
Profit from
recurring      1,459  29.7%    1,359  29.7%    (100)  -7%    22    2%     (10)  -1%   (112)  -8%
operations
                                                                                                   
Asia / Rest
of the World
                                                                                 
(€ millions)   HY1 2012/13      HY1 2013/14      Change         Organic       Group        Forex impact
                                                                Growth        Structure
Net sales      2,005   100.0%   1,749   100.0%   (256)   -13%   (82)   -4%    (12)   -1%   (162)   -8%
(Excl. T&D)
Gross margin
after          1,262   62.9%    1,089   62.3%    (173)   -14%   (63)   -5%    0      0%    (110)   -9%
logistics
costs
Advertising    (359)   17.9%    (298)   17.1%    61      -17%   39     -11%   0      0%    22      -6%
& promotion
Contribution   903    45.0%    791    45.2%    (112)  -12%   (25)  -3%    0     0%    (88)   -10%
after A&P
Profit from
recurring      674    33.6%    584    33.4%    (90)   -13%   (24)  -4%    1     0%    (67)   -10%
operations
                                                                                                   
Americas
                                                                                 
(€ millions)   HY1 2012/13      HY1 2013/14      Change         Organic       Group        Forex impact
                                                                Growth        Structure
Net sales      1,282   100.0%   1,209   100.0%   (73)    -6%    41     3%     (2)    0%    (112)   -9%
(Excl. T&D)
Gross margin
after          831     64.8%    794     65.7%    (37)    -4%    39     5%     (1)    0%    (75)    -9%
logistics
costs
Advertising    (243)   18.9%    (231)   19.1%    12      -5%    (6)    2%     0      0%    17      -7%
& promotion
Contribution   589    45.9%    563    46.6%    (25)   -4%    33    6%     (1)   0%    (58)   -10%
after A&P
Profit from
recurring      378    29.5%    356    29.4%    (22)   -6%    19    5%     (1)   0%    (40)   -10%
operations
                                                                                                   
Europe
                                                                                 
(€ millions)   HY1 2012/13      HY1 2013/14      Change         Organic       Group        Forex impact
                                                                Growth        Structure
Net sales      1,619   100.0%   1,612   100.0%   (7)     0%     59     4%     (33)   -2%   (33)    -2%
(Excl. T&D)
Gross margin
after          1,003   61.9%    1,025   63.6%    23      2%     45     5%     (11)   -1%   (11)    -1%
logistics
costs
Advertising    (286)   17.7%    (292)   18.1%    (5)     2%     (12)   4%     1      0%    5       -2%
& promotion
Contribution   716    44.2%    734    45.5%    17     2%     33    5%     (10)  -1%   (6)    -1%
after A&P
Profit from
recurring      407    25.1%    419    26.0%    12     3%     27    7%     (10)  -2%   (5)    -1%
operations
                                                                                                   

NB: France is now included in the Europe operating segment

Profit from recurring operations by region (former operating segments)

Europe
excluding                                                                        
France
                                                                                 
(€ millions)   HY1 2012/13      HY1 2013/14      Change       Organic     Group        Forex
                                                              Growth      Structure    impact
Net sales      1,245   100.0%   1,215   100.0%   (30)   -2%   35    3%    (32)   -3%   (33)   -3%
(Excl. T&D)
Gross margin
after          744     59.7%    743     61.1%    (1)    0%    27    4%    (11)   -1%   (16)   -2%
logistics
costs
Advertising    (193)   15.5%    (191)   15.7%    2      -1%   (4)   2%    1      -1%   5      -3%
& promotion
Contribution   551    44.2%    552    45.4%    1     0%    22   4%    (10)  -2%   (11)  -2%
after A&P
Profit from
recurring      326    26.2%    320    26.3%    (6)   -2%   12   4%    (10)  -3%   (9)   -3%
operations
                                                                                              
France
                                                                            
(€ millions)   HY1 2012/13      HY1 2013/14      Change       Organic     Group        Forex
                                                              Growth      Structure    impact
Net sales      374     100.0%   397     100.0%   23     6%    24    6%    (1)    0%    0      0%
(Excl. T&D)
Gross margin
after          259     69.4%    283     71.2%    23     9%    18    7%    0      0%    5      2%
logistics
costs
Advertising    (93)    25.0%    (101)   25.4%    (7)    8%    (7)   8%    0      0%    0      0%
& promotion
Contribution   166    44.4%    182    45.8%    16    10%   11   6%    0     0%    5     3%
after A&P
Profit from
recurring      80     21.5%    99     25.0%    19    23%   15   18%   0     0%    3     4%
operations
                                                                                              

Foreign exchange impact

                                                            
Forex impact HY1                                                    On Profit
2013/14                       Average rates evolution     On Net   from
(€ millions)                                               Sales    Recurring
                             2012/13  2013/14  %                Operations
US dollar                USD   1.27     1.34     5.4%    (54)     (35)
Indian rupee             INR   69.63     83.44     19.8%   (55)     (22)
Japanese yen             JPY   101.88    133.85    31.4%   (21)     (12)
Russian rouble           RUB   40.15     43.89     9.3%    (15)     (11)
Venezuelan bolivar       VEF   10.83     16.79     54.9%   (16)     (11)
Chinese yuan             CNY   8.03      8.20      2.2%    (11)     (8)
Currency translation                                                (3)
variance / FX hedging
Other currencies                                    (134)    (10)
Total                                               (306)    (112)
                                                                    

Foreign exchange estimated impact FY 2013/14 (profit from recurring
operations)

Over the full 2013/14 financial year, the forex impact on profit from
recurring operations is estimated at approximately € (170) million, based on
average foreign exchange rates for the full financial year, projected on 7
February 2014, in particular EUR/USD = 1.35.

Group structure effect

                                         
Group structure HY1 2013/14                  On Profit from
(€ millions)                  On Net Sales   Recurring
                                             Operations
Scandinavian activities       (22)           (10)
Spanish activities            (11)           1
Australian activities         (6)            2
Other                         (9)            (2)
Total Group Structure         (48)           (10)
                                             

Summary consolidated income statement

                                                                  
(€ millions)                             31/12/2012 (*)  31/12/2013  Change
                                                                    
Net sales                                4,907           4,570       -7%
Gross Margin after logistics costs       3,096           2,909       -6%
A&P expenditure                          (888)           (821)       -8%
Contribution after A&P expenditure       2,208           2,088       -5%
Structure costs                          (749)           (729)       -3%
Profit from recurring operations         1,459           1,359       -7%
Financial income/(expense) from           (280)            (227)        -19%
recurring operations
Corporate income tax on items from        (317)            (295)        -7%
recurring operations
Net profit from discontinued
operations, non-controlling interests    (11)            (11)        0%
and share of net income from associates
Group share of net profit from           852             826         -3%
recurring operations
                                                                        
Other operating income & expenses         (95)             (20)         NA
Non-recurring financial items             (0)              2            NA
Corporate income tax on items from non    89               20           NA
recurring operations
                                                                  
Group share of net profit                846             828         -2%
Non-controlling interests                11              11          -1%
Net profit                               857             839         -2%
                                                                        

(*) Data published with respect to fiscal year 2012/2013 has been adjusted
following the application of amended IAS 19 (Employee Benefits), adopted in
the European Union and whose application is mandatory for the Group from 1
July 2013 with retrospective effect as from 1 July 2012

Balance sheet (assets)

                                                                
Assets                                            30/06/2013 (*)  31/12/2013
(€ millions)
(Net book value)                                                 
Non-current assets
Intangible assets and goodwill                     16,753           16,291
Tangible assets and other assets                   2,506            2,605
Deferred tax assets                               1,771           1,729
Total non-current assets                          21,030          20,625
                                                                    
Current assets
Inventories                                        4,484            4,568
of which aged work-in-progress                     3,617            3,706
of which non-aged work-in-progress                 69               65
Receivables (**)                                   1,159            1,695
Trade receivables                                  1,090            1,624
Other trade receivables                            69               71
Other current assets                               209              198
Other current assets                               203              192
Tangible/intangible current assets                 6                6
Tax receivable                                     27               39
Cash and cash equivalents and current             620             688
derivatives
Total current assets                              6,499           7,188
                                                                    
Assets held for sale                               8                4
                                                                
Total assets                                      27,537          27,817
                                                                  
(**) after disposals of receivables of:            505             684
                                                                    

(*) Data published with respect to fiscal year 2012/2013 has been adjusted
following the application of amended IAS 19 (Employee Benefits), adopted in
the European Union and whose application is mandatory for the Group from 1
July 2013 with retrospective effect as from 1 July 2012

Balance sheet (liabilities and shareholders’ equity)

                                                                
Liabilities and shareholders’ equity              30/06/2013 (*)  31/12/2013
(€ millions)
                                                                
Group Shareholders’ equity                        11,014          11,467
Non-controlling interests                         165             162
of which profit attributable to non-controlling   19              11
interests
Total Shareholders’ equity                        11,179          11,629
                                                                    
Non-current provisions and deferred tax            4,076            4,069
liabilities
Bonds                                              6,949            6,731
Non-current financial liabilities and derivative  915             1,441
instruments
Total non-current liabilities                     11,940          12,241
                                                                    
Current provisions                                 163              153
Operating payables                                 1,546            1,572
Other operating payables                           924              765
which other operating payables                     635              723
Tangible/intangible current payables               288              41
Tax payable                                        127              167
Bonds                                              1,001            525
Current financial liabilities and derivatives     656             765
Total current liabilities                         4,418           3,947
                                                                    
Liabilities held for sale                         0               0
Total current liabilities                         27,537          27,817
                                                                    

(*) Data published with respect to fiscal year 2012/2013 has been adjusted
following the application of amended IAS 19 (Employee Benefits), adopted in
the European Union and whose application is mandatory for the Group from 1
July 2013 with retrospective effect as from 1 July 2012

Contact:

Pernod Ricard Contacts
Jean Touboul: +33 (0)1 41 00 41 71
Financial Communication – Investor Relations VP
Sylvie Machenaud: +33 (0)1 41 00 42 74
Director External Communications
Alison Donohoe: +33 (0)1 41 00 42 14
Investor Relations
Carina Alfonso Martin: +33 (0)1 41 00 43 42
Press Relations Manager
 
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