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