Press release - Paris, 7 February 2019
Pernod Ricard (Paris:RI):
VERY GOOD H1 FY19
+7.8% ORGANIC SALES GROWTH (+5.0% REPORTED)
+12.8% ORGANIC GROWTH IN PRO1 (+10.6% REPORTED)
+11% NET PROFIT FROM RECURRING OPERATIONS2
CONTINUED DELEVERAGING: NET DEBT / EBITDA AT 2.6X3
UPGRADE OF FY19 GUIDANCE4:
ORGANIC GROWTH IN PRO BETWEEN +6% AND +8%
FY19-21 PLAN “TRANSFORM & ACCELERATE”:
SALES +4 TO +7% WITH OPERATING LEVERAGE OF C. 50-60 BPS PER ANNUM
Sales for H1 FY19 totalled €5,185m, with organic growth of +7.8% and reported growth of +5.0%, due to negative FX.
Growth continued to be dynamic, thanks to the consistent implementation of the medium-term growth and operational excellence roadmap:
Strong dynamism reflected consistent long-term investment:
Very strong performance across portfolio, with strong price/mix at +2.3%:
Q2 Sales were €2,798m, with +5.6% organic growth (+3.2% reported), following a Q1 that was enhanced by phasing and the comparison base.
H2 growth is expected to moderate due to Martell sustainable growth management, wholesaler inventory optimisation in USA and a commercial dispute in France and Germany.
1 PRO: Profit from Recurring Operations
2 Reported Group share
3 Based on average EUR/USD rates: 1.18 in 2018 vs. 1.13 in 2017
4 Guidance given to market on 29 August 2018 of organic PRO growth between +5% and +7%
5 CNY: Chinese New Year on 5 Feb 2019 vs. 16 Feb 2018; India: low comparison basis due to lapping highway ban in Q1 FY18
H1 FY19 PRO6 was €1,654m, with organic growth of +12.8% and +10.6% reported. For full-year FY19, the FX impact on PRO is estimated at c. +€30m7.
The H1 organic PRO margin was up very significantly, by +148bps, thanks to:
H2 margin to be softer due to managing Martell growth sustainability, finished goods’ inventory optimisation in USA and A&P phasing.
The H1 FY19 corporate income tax rate on recurring items was c.25%; the rate is expected at c. 26% for full-year FY19.
Group share of Net PRO1 was €1,105m, +11% reported vs. H1 FY18, thanks mainly to excellent improvement in PRO.
Group share of Net profit was €1,023m, -11% reported vs. H1 FY18, despite excellent improvement in PRO due to lapping positive non-recurring items in H1 FY18 (one-off Scotch bulk sale, tax reimbursement and re-evaluation of deferred tax pursuant to the USA tax reform.)
FREE CASH FLOW AND DEBT
Free Cash Flow was €585m, in decline vs. H1 FY18, due to positive non-recurring one-offs in H1 FY18.
Net debt decreased by €152m vs. H1 FY18 to €7,223m at 31 December 2018 despite the €93m increase in the dividend payment. The Net Debt/EBITDA ratio at average rates8 was down significantly to 2.6x at 31 December 2018.
The average cost of debt was 3.8% for H1 FY19 and expected at c. 3.9% for full year FY19.
6 PRO: Profit from Recurring Operations; A&P: Advertising & Promotional expenditure
7 Based on average FX rates projected on 24 January 2019, particularly a EUR/USD rate of 1.14
8 Based on average EUR/USD rates: 1.18 in 2018 vs. 1.13 in 2017
TRANSFORM & ACCELERATE 3-YEAR PLAN
“Transform & Accelerate” started in FY19 with the objective of embedding dynamic growth and improving operational leverage, in line with the objective of maximising long term value creation.
REMINDER OF FINANCIAL POLICY
As part of this communication, Alexandre Ricard, Chairman and Chief Executive Officer, declared,
“H1 FY19, the first semester of our new Transform & Accelerate 3-year plan, was very strong. While enhanced by phasing, it confirms the acceleration of our growth, resulting from our long-term investment strategy.
For full year FY19, in an environment that remains uncertain, we aim to continue dynamic and diversified growth across our regions and brands. By the end of June 2019, we will have completed our operational excellence plan announced in 2016, delivering €200m of P&L savings one year ahead of plan.
We are increasing our guidance for FY19 organic growth in Profit from Recurring Operations to between +6% and +8% while improving operating leverage by c. 50bps. We will continue to roll out our strategic plan, focused on investing for sustainable and profitable long-term growth.”
All growth data specified in this press release refers to organic growth (at constant FX and Group structure), unless otherwise stated. Data may be subject to rounding.
A detailed presentation of H1 FY19 Sales and Results can be downloaded from our website: www.pernod-ricard.com
Audit procedures have been carried out on the half-year financial statements. The Statutory Auditors’ report will be issued following their review of the management report.
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 is calculated after excluding the impacts of exchange rate movements and acquisitions and disposals.
Exchange rates impact is calculated by translating the current year results at the prior year’s exchange rates.
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 calculation from the anniversary of the acquisition date in the current year.
Where a business, brand, brand distribution right or agency agreement was disposed of, or terminated, in the prior year, the Group, in the organic movement calculations, excludes the results for that business from the prior year. 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 to focus on the performance of the business which is common to both years and which represents those measures that local managers are most directly able to influence.
Profit from recurring operations
Profit from recurring operations corresponds to the operating profit excluding other non-current operating income and expenses.
About Pernod Ricard
Pernod Ricard is the world’s n°2 in wines and spirits with consolidated Sales of €8,987m in FY18. 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, Malibu liqueur, Mumm and Perrier-Jouët champagnes, as well Jacob’s Creek, Brancott Estate, Campo Viejo and Kenwood wines. Pernod Ricard employs a workforce of approximately 18,900 people and operates through a decentralised organisation, with 6 “Brand Companies” and 86 “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 Euronext (Ticker: RI; ISIN code: FR0000120693) and is part of the CAC 40 index.
|Asia-Rest of World||Americas||Europe|
|Egypt||Persian Gulf||Costa Rica||Croatia|
Strategic International Brands’ organic Sales growth
Organic Sales growth
|(in 9Lcs millions)|
|Strategic International Brands||29.1||10%||4%||6%|
Sales Analysis by Period and Region
|H1 FY18||H1 FY19||Change||Organic Growth||Group Structure||Forex impact|
|Asia / Rest of World||2,015||40.8%||2,266||43.7%||251||12%||323||16%||(0)||0%||(73)||-4%|
|Q1 FY18||Q1 FY19||Change||Organic Growth||Group Structure||Forex impact|
|Asia / Rest of World||916||41.1%||1,084||45.4%||169||18%||208||23%||(0)||0%||(39)||-4%|
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Quelle: Business Wire
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