Pernod Ricard : Robust Performance, in a Normalizing Spirits Market
Organic Sales decline -1% (-4% reported)
Organic PRO1 growth +1.5% (-7% reported)
Press Release –
“Pernod Ricard achieved robust results for the fiscal year ending
Our global scale, our agility and our portfolio of brands, the most extensive in the industry, combined with our capacity to understand and to invest behind our consumers’ desires and aspirations puts us in a very strong position to navigate these challenges.
I’d like to thank our teams for their responsiveness and relentless commitment to drive Pernod Ricard’s long-term sustainable and profitable growth roadmap.”
EXECUTIVE SUMMARY
Key highlights of fiscal year FY24:
-
Organic
Net Sales broadly stable (growing c.+1% excludingRussia ) as strong performance in many mature and emerging markets largely offsets a still-normalizing US and challengingChina
- Sequential volume recovery throughout H2 in most markets
- Pricing, operational efficiencies and cost discipline leading to organic Gross Margin and organic Operating Margin expansion of +108bps and +80bps
- Investing in brand desirability and sustainable long-term growth with a sharp and consistent A&P policy and an acceleration in strategic investments
- Continuing active portfolio management notably with disposals of some Strategic Local Brands and the announcement of the disposal of Strategic Wine brands2
SALES
FY24
By regions:
-
Americas -5%, with low single digit growth in price/mix:USA -9%, with low single digit decline in price/mix- Spirits market continues to normalize
- Depletions value c.-7% and Sell-out value c.-4%
- Acquired brands Jefferson’s & Código enjoying growth, Skrewball marketing campaign launched in May
- Jameson holding share
- Retailer and distributor inventory adjustments throughout FY24
- In a still elevated interest rate environment, further inventory adjustments expected in FY25 leading to an anticipated decline in Q1
Canada broadly stable, strong RTD growth, gaining shareBrazil in slight growth with favourable comps & consumer demand recovery in H2, gaining shareMexico in slight growth, with unfavourable comps and facing a soft tourism season, gaining share
-
Asia-RoW +3%, with low single digit growth in price/mix:
China -10%, with flat price/mix:- Challenging macro-economic environment and continuing weak consumer sentiment impacting demand
- Strong brand equity supporting price discipline
- Market share gains
-
Stable sales of Martell Noblige, good performance on Premium International Brands Absolut, Jameson,
Olmeca and Beefeater - Expecting a strong decline in Q1, with subdued trade sentiment ahead of MAF FY25 and cycling a stronger consumer sentiment last year in Q1; with full year trend expected to be similar to FY24
India +6%, with mid-single digit growth in price/mix:- Strong, broad-based and accelerating performance underpinned by strong consumer demand
- Sales are premiumizing
-
Strong growth on International Brands, notably Jameson,
Absolut and The Glenlivet - Growth of Seagram’s whiskies, led by the higher style whiskies Royal Stag and Blenders Pride and successful launch of the Single Malt Longitude 77
-
Very good growth in
Japan andTaiwan Market , gaining share, while declining inKorea , both in sales and share -
Very strong results in
Africa andMiddle East , notably inTurkey with an outstanding performance on Chivas andNigeria -
Flat in
South Africa with difficult macro-economic conditions
-
Europe -5%, with flat price/mix:-
Solid performance in
Europe excludingRussia (+2%), with strong performances notably inGermany andPoland - Holding or gaining share in some key markets
-
Good brand performance on Jameson, Ballantine’s,
Absolut and Bumbu -
Strong RTD performance, notably with Lillet and
Absolut
-
Solid performance in
-
Global Travel Retail +2%, with low single digit decline in price/mix:
- Full year sales growth with soft H1 impacted by protracted sales negotiation, and good growth in H2
- Passenger numbers fully normalized with the exception of the ongoing recovery of Chinese travelers
Asia region performance is strong though impacted by the weakness of the macro-economic situation inChina -
Good growth across most whiskies including
Royal Salute , The Glenlivet, Ballantine’s and Jameson
By categories:
Jameson continuing its international expansion,
-
Strategic International Brands -3%:
-
Martell, sharp decline in
China -
Jameson, strong growth excluding impact of
USA andRussia -
Absolut , strong growth inEurope excludingRussia , andAsia , especiallyChina &India -
Strong performance of Scotch brands in
Asia , excludingChina , inEurope excludingRussia and inMiddle East andAfrica
-
Martell, sharp decline in
-
Strategic Local Brands +5%:
-
Strong momentum of Seagram’s whiskies in
India , in particular Royal Stag and Blenders Pride -
Strong growth of Kahlúa in
North America andWestern Europe
-
Strong momentum of Seagram’s whiskies in
-
Specialty Brands -2%:
-
Good growth across
Asia ,Middle East ,Africa ,Central Europe and in Central andSouth America . Soft result inWestern Europe andUSA - Good growth on Bumbu, Skrewball, Altos and Lillet
-
Good growth across
Overall portfolio having mid-single digit pricing, with lower volumes and adverse market mix.
RESULTS
FY24 Profit from Recurring Operations €3,116m, an organic growth of +1.5%, a reported decline of -7%
- Strong organic Gross Margin expansion of +108bps with pricing, operational efficiencies and strict cost control
-
A&P at €1.9bn being c.16% of
Net Sales and discipline on Structure Costs - Operating Margin expands organically +80bps to 28.4%, but declines on a reported basis to 26.9%
- Reported Operating Margin impacted by adverse foreign exchange of €(425)m and favourable perimeter effects of +€140m
- Foreign Exchange impact largely on Turkish Lira, Argentinean Peso, US Dollar and Chinese Yuan
Group share of Net PRO was €2,000m, down -14.5%. Higher interest rates led to increased Recurring Financial Expenses with an average cost of debt at 3.2%. Income Tax on Recurring Operations is lower, in line with Profit from Recurring Operations.
Group Share of Net Profit was €1,476m, down -35%. Non-Recurring Operating Expenses include Wine business impairment with partial mitigation from proceeds on disposals and reversal of impairment on Kahlúa. Non-Recurring Income Tax includes impacts on deferred tax driven by the reversal of Kahlúa impairment and impairment of deferred taxes on foreign tax credit in the
Earnings Per Share in decline at €7.90, reflecting lower Group Share of Net Profit from Recurring Operations, and benefitting from Share Buy Back.
FREE CASH FLOW AND DEBT
Free Cash Flow at c. €963m, -33% vs FY23, driven by lower reported profit and acceleration of our planned strategic investments to fuel future growth.
Net debt up €677m vs.
A dividend is proposed of €4.70 per share, subject to shareholder approval at the Annual General Meeting on 8th
Pernod Ricard’s Financial Policy remains unchanged:
While maintaining investment grade rating
- Investment in future organic growth, in particular through Strategic Inventories and Capital Expenditure
- Continued active portfolio management, including value creating M&A
- Dividend distribution at c.50% of Net Profit from Recurring Operations, aiming at consistently growing dividends
- Share buyback, when above priorities are fulfilled
OUTLOOK
Leveraging our diversified portfolio and balanced footprint we reiterate our confidence in our medium-term financial framework of aiming for the upper endof +4% to +7% organic
For FY25 we expect:
-
Full-year organic
Net Sales back to growth with continued volume recovery and to sustain organic Operating Margin -
A soft Q1 with further inventory adjustments in the US, a continued very weak macro context in
China and a good performance in the rest of the world
All growth data specified in this press release refers to organic growth (at constant
A detailed presentation of FY24 Sales & Results can be downloaded from our website: www.pernod-ricard.com
Definitions and reconciliation of non-IFRS measures to IFRS measures
Pernod Ricard’s management process is based on the following non-IFRS measures which are chosen for planning and reporting. The Group’s management believes these measures provide valuable additional information for users of the financial statements in understanding the Group’s performance. These non-IFRS measures should be considered as complementary to the comparable IFRS measures and reported movements therein.
Organic growth
- Organic growth is calculated after excluding the impacts of exchange rate movements, acquisitions and disposals, changes in applicable accounting principles and hyperinflation.
- Exchange rates impact is calculated by translating the current year results at the prior year’s exchange rates and adding the year-on-year variance in the reported transaction impact between the current year and the previous year.
- For acquisitions in the current year, the post-acquisition results are excluded from the organic movement calculations. For acquisitions in the prior year, post-acquisition results are included in the prior year but are included in the organic movement calculations of the current year only from the anniversary date of the acquisition.
-
The impact of hyperinflation on Profit from Recurring Operations in
Turkey andArgentina is excluded from organic growth calculations by capping local unit price/cost increases to a maximum of +26% per year, equivalent to +100% over three years. - Where a business, brand, brand distribution right or agency agreement was disposed of or terminated in the prior year, the Group excludes the results for that business from the prior year in the organic movement calculations. For disposals or terminations in the current year, the Group excludes the results for that business from the prior year from the date of the disposal or termination.
- This measure enables users to compare the Group’s performance on a like-for-like basis, focusing on areas that local management is most directly able to influence.
Profit from recurring operations
Profit from recurring operations corresponds to the operating profit excluding other non-recurring operating income and expenses.
About
Appendices
Financial Tables can be consulted on www.pernod-ricard.com
Date (subject to change) |
Event |
17th |
Q1 FY25 Sales |
8th |
Annual General Meeting |
13th |
H1 FY25 Sales and Results |
17th |
Q3 FY25 Sales |
1 Profit from Recurring Operations
2 Subject to fulfilment of closing conditions, including regulatory clearances and expected to occur during H2 FY25
3 Based on average EUR/USD rate: 1.08.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240828965467/en/
Florence Tresarrieu / Global SVP Investor Relations and
Emmanuel Vouin / Head of External Engagement +33 (0) 1 70 93 16 34
Source: