Pernod Ricard Sa · EURONEXT:RI
Pernod Ricard Sa — Pernod Ricard S A — FY2024 Earnings Presentation
55 slides from Pernod Ricard Sa's earnings presentation, Aug 29, 2024
Slide 1: FY24 Sales and Results
FY24 Sales and Results 29th August 2024 Financial Year ended 30th June 2024 Growth data specified in this presentation refers to organic growth, unless otherwise stated. Data may be subject to rounding. Presentation can be downloaded from www.pernod-ricard.com
Slide 2: Disclaimer
Disclaimer This presentation may contain forward-looking statements, which are based on estimations and forecasts and reflect management's current views and reasonable assumptions. As they relate to future events and circumstances and depend on a number of factors that are outside Pernod Ricard’s co
Slide 3: Robust performance in a normalizing spirits market
Robust performance in a normalizing spirits market Organic Net Sales -1% (reported -4%), Organic PRO1 +1.5% (reported -7%) Organic Net Sales broadly stable (growing c.+1% excluding Russia) as strong performance in many mature and emerging markets largely offsets a still-normalizing US and challeng
Slide 4: Financial performance benefiting from diversified premium portfolio and geographic breadth
Financial performance benefiting from diversified premium portfolio and broad-based and balanced geographic breadth Successfully delivering organic margin expansion with broadly stable top line Sales Organic -1% DPS €11,598m flat Reported -4% €4.701 PRO Organic +1.5% €3,116m Reported -7% EPS -13% €7
Slide 5: Geographic breadth mitigates softer results in US & China
Broad-based and balanced geographic breadth mitigates the impact of softer results in US & China Holding or gaining value market share in most markets3 Americas Europe ASIA ROW Group OSG1 OSG1 OSG1 OSG1 -5% -5% Ex Russia OSG1 +2% +3% -1% Ex Russia OSG +1% Price/mix Price/mix Price/mix +LSD2 flat +LS
Slide 6: Normalization is concluded in most markets following two years of outsized growth
Normalization is concluded in most markets following two years of outsized growth Sequential volume recovery in FY24 with volumes in most markets1 being broadly stable or growing in H2 Group Net Sales +26% vs FY19 +5% CAGR Americas Europe ASIA ROW CAGR CAGR CAGR +3% +4% +6% +17% +37% +20% 122 126 13
Slide 7: Consumer centricity fuels innovation and marketing investments
Consumer centricity fuels innovation and marketing investments Group A&P ratio consistently maintained at c.16% of Net Sales, with disciplined arbitration between brands and markets to maximise impact Absolut US – Ocean Spray Lillet x Emily in Paris Skrewball Whiskey The new Vodka Cran RTD range com
Slide 8: A portfolio intertwined with sport
A portfolio intertwined with sport, tapping into emotions through togetherness, passion and celebration Jameson: Chivas: Pernod Ricard: Official partner of Official Whisky partner of Arsenal Official partner of Paris Saint-Germain the English Football League 8
Slide 9: Active portfolio management, increasing focus on international spirits and champagne
Active portfolio management, increasing focus on international spirits and champagne Reinforcing premium credentials and strengthening key geographies Disposals expected to have an accretive impact to group Gross Margin Strategic Local Brands Disposals Strategic Wines Disposals Disposal of local Eur
Slide 10: Active portfolio management, focus on fast growing and attractive categories
Active portfolio management, increasing focus on fast growing and attractive categories Pernod Ricard joins Lewis Hamilton & Casa Lumbre Spirits to enhance the success of ALMAVE, a super premium, distilled non-alc. blue agave spirit The confluence of three accelerating global trends: tequila, non-al
Slide 11: Delivering sustainable growth throughout our value chain
Delivering sustainable growth throughout our value chain Preserving natural ecosystems and driving circularity Leveraging the power of our -30% 10 Reduction in carbon emissions, scope Responsible Drinking campaigns by brands to promote 1&2 since FY18 strategic brands responsible drinking Targeting
Slide 12: Strengthening our ambition to fight climate change
Strengthening our ambition to fight climate change Revised reduction targets in line with a 1.5°C trajectory validated by the Science Based Targets initiative (SBTi) Action plans across distillation, packaging, transportation & agriculture 12
Slide 13: Delivering sustainable, stretched profitable growth
Delivering sustainable, stretched profitable growth Growth data specified in this presentation refers to organic growth, unless otherwise stated. Data may be subject to rounding. This presentation can be downloaded from www.pernod-ricard.com
Slide 14: Performance builds on our strengths, growth model and tech and data
Performance builds on our strengths, leverages our growth model and is enhanced by tech and data Increasing market capabilities from activating 6-8 brands to 15-20 brands PROMOTIONAL PORTFOLIO EFFECTIVENESS EFFECTIVENESS PREMIUM PORTFOLO BALANCED AND BROAD BASED GEOGRAPHIC FOOTPRINT WINNING CULTURE
Slide 15: Favourable trends sustain long-term growth of premium spirits
Favourable trends sustain long-term growth of premium spirits Powerful mega Evolving Increasing penetration1 of spirits trends consumer needs consumption amongst US Gen Z Global growth in LDA2 Experiences Global growth in Middle % Penetration – LDA2 to 27 years3 & Affluent class Self Expression Wome
Slide 16: Data and AI at the heart of our business
Data and AI at the heart of our business Granular segmentation to position each brand Demand analysis 1 need 1 moment 1 consumer type Marketing investments % % 28 Markets covering c.75% of Promotion & Pricing April-March % discount Group Net Sales, now equipped with at least one Sales forces KDP1 16
Slide 17: Agile organization and management with long-established expertise in spirits
Agile organization and management with long-established expertise in spirits An experienced Executive Committee Agile Operating Model empowering leading our ambition teams Headquarters Alexandre Hélène de Philippe Gilles Ricard Tissot Guettat Bogaert Chairman EVP Finance EVP Global EVP Global & CEO
Slide 18: Enduring framework for organic value creation
Enduring framework for organic value creation Top line trajectory and margin expansion consistently delivered within the frame AMBITION +4% to +7% 2015 2018 2018 2022 2023 2025 CAGR +4% CAGR +5% / +52bps p.a. CAGR FY22-24 +4% / +56bps p.a. +32bps +10% (1)% +17% +80bps +52bps +72bps +213bps +6% +10%
Slide 19: India – Building on strong tailwinds and maintaining market leadership
India – Building on strong tailwinds and maintaining market leadership With 30 years of experience and deep local expertise India enjoys strong, favourable macro Pernod Ricard enjoys a market leading fundamentals . . . position . . . Strong GDP growth c. 48% overall market share1 Middle and Affluent
Slide 20: Germany – Double-Digit growth consolidating market leadership
Germany – Double-Digit growth consolidating market leadership Innovations driving one third of growth Germany faces mixed macro Our portfolio meets evolving consumer fundamentals . . . trends . . . Subdued GDP and cost of living squeeze Private labels and discount retailers Improving Absolut: Lillet
Slide 21: Driving long-term sustainable value creation
Driving long-term sustainable value creation Mid-term financial framework1 o +4% to +7% annual organic top line growth, aiming for the upper end of the range o Focus on Revenue Growth Management, enhanced by our proprietary digital predictive tools (Key Digital Programs) o Continuous improvement in
Slide 22: FY24 Sales Update
FY24 Sales Update Growth data specified in this presentation refers to organic growth, unless otherwise stated. Data may be subject to rounding. This presentation can be downloaded from www.pernod-ricard.com
Slide 23: Must Win Markets
Must Win Markets • Spirits market continues to normalize USA • Depletions value c.-7% and Sell-out value c.-4% Weight in Net Sales 19% • Acquired brands Jefferson’s & Código enjoying growth, Skrewball marketing campaign launched in May • Jameson holding share Organic • Retailer and distributor inven
Slide 24: Must Win Markets
Must Win Markets India Weight in Net Sales 12% • Strong, broad-based and accelerating performance underpinned by strong consumer demand • Sales are premiumizing Organic • Strong growth on Strategic International Brands, notably Jameson, Growth Price/Mix +MSD1 Absolut and The Glenlivet +6% • Growth o
Slide 25: Regions
Regions • Solid performance in Europe excluding Russia, with strong Organic performances notably in Germany and Poland Europe Growth Price/Mix • Holding or gaining share in some key markets2 Weight in Net Sales 28% -5% flat • Good brand performance on Jameson, Ballantine’s, Absolut and +2% Bumbu exc
Slide 26: House of Brands
House of Brands Jameson continuing its international expansion, Absolut in dynamic growth in Asia-RoW and Europe, Scotch Brands negatively impacted by US and China • Martell, sharp decline in China Strategic Organic • Jameson, strong growth excluding impact of Russia International Brands Growth Pric
Slide 27: FY24 Financial Update
FY24 Financial Update Growth data specified in this presentation refers to organic growth, unless otherwise stated. Data may be subject to rounding. This presentation can be downloaded from www.pernod-ricard.com
Slide 28: Strong Gross Margin expansion leading to organic Operating Margin expansion
Strong Gross Margin expansion with pricing, operational efficiencies and strict cost control, leading to organic Operating Margin expansion Organic +80bps Organic PRO¹ + 108 bps + 30 bps 27.6% (58) bps 28.4% 26.9% +1.5% (150) bps Reported PRO -7% FY23 Reported Margin Gross Margin A&P Structure costs
Slide 29: EPS down 13% with softer reported PRO and higher financial expenses
EPS down 13% with softer reported Profit from Recurring Operations and higher financial expenses Reported FY23 FY24 ∆ Profit from Recurring Operations 3,348 3,116 (7)% Financial Expenses from Recurring Operations (291) (417) Income tax on Recurring Operations (691) (646) Minority interests and other
Slide 30: Decline in Group Share of Net Profit
Decline in Group Share of Net Profit as decrease in Group Share of Profit from Recurring Operations is compounded by increase in Non-Recurring Expenses € millions FY23 FY24 Reported ∆ Group share in Profit from Recurring Operations 2,340 2,000 (14.5)% Non-Recurring Operating expense (83) (392) Non-R
Slide 31: Cash Flow & Debt
Cash Flow & Debt
Slide 32: Robust cash generation with softer reported PRO
Robust cash generation with softer reported PRO and increased strategic investments in Capex and maturing inventories to support future growth € millions FY23 FY24 Reported ∆ %∆ Profit from Recurring Operations 3,348 3,116 (232) (7)% Amortisation, depreciation, provision movements and other 406 452
Slide 33: Capital deployed with discipline
Capital deployed with discipline Net Debt increase €677m, combined with softer reported PRO leading to an increase in ratio of Net Debt/EBITDA Net Debt / 2.7x 3.1x EBITDA ratio (1,208) (46) (10,951) (10,273) +963 +67 (453) Net Debt / EBITDA 3.1x¹ 30 June 2023 Free Cash M&A Share Dividends FX 30 June
Slide 34: Committed to long term shareholder value creation
Committed to long term shareholder value creation Proposed dividend¹ of €4.70 per share, in line with our financial policy CAGR increase of 8.5% since FY19 3.3x €/share x 4.70 4.70 4.12 DPS €4.70¹ 3.12 3.12 2.66 FY19 FY20 FY21 FY22 FY23 FY24 34 1.Subject to shareholder approval at AGM on 8th Novembe
Slide 35: Capital Allocation priorities
Capital Allocation priorities 3.3x x Financial Policy While maintaining investment grade rating 1. Investment in future organic growth, in particular through Strategic Inventories and Capital Expenditure 2. Continued active portfolio management, including value creating M&A 3. Dividend distribution
Slide 36: Outlook
Outlook Leveraging our diversified portfolio and balanced footprint, we reiterate our confidence in our medium- term financial framework of aiming for the upper end of +4% to +7% organic Net Sales growth and +50bps to +60bps organic Operating Margin expansion For FY25 we expect: • Full-year organic
Slide 37: Definitions and reconciliation of non-IFRS measures to IFRS measures
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 fin
Slide 38: Upcoming Communications
Upcoming Communications Date (subject to change) Event 17th October 2024 Q1 FY25 Sales 8th November 2024 Annual General Meeting 13th February 2025 H1 FY25 Sales and Results 17th April 2025 Q3 FY25 Sales 38
Slide 39: Emerging Markets
Emerging Markets Asia-Rest of World Americas Europe Algeria Malaysia Argentina Albania Angola Mongolia Bolivia Armenia Cambodia Morocco Brazil Azerbaijan Cameroon Mozambique Caribbean Belarus China Myanmar Chile Bosnia Congo Namibia Colombia Bulgaria Egypt Nepal Costa Rica Croatia Ethiopia Nigeria C
Slide 40: Strategic International Brands' organic Net Sales growth
Strategic International Brands’ organic Net Sales growth Volumes FY24 Organic Net Sales Volumes Price/mix growth FY24 (in 9Lcs millions) Absolut 12.0 (1)% (5)% +4% Jameson 10.7 +1% +0% +1% Ballantine's 8.8 +1% +0% +1% Chivas Regal 4.7 (1)% (6)% +5% Malibu 4.4 (4)% (6)% +2% Ricard 4.3 +3% (2)% +4% Ha
Slide 41: Sales Analysis by Period and Region
Sales Analysis by Period and Region Net Sales FY23 FY24 Change Organic Growth Group Structure Forex Impact (€ millions) Americas 3,481 28.7% 3,340 28.8% (141) (4)% (159) (5)% +283 +8% (265) (8)% Asia / Rest of World 5,191 42.8% 4,973 42.9% (218) (4)% +167 +3% +111 +2% (496) (10)% Europe 3,465 28.5%
Slide 42: Summary Consolidated Income Statement
Summary Consolidated Income Statement (€ millions) FY23 FY24 Change Net sales 12,137 11,598 (4)% Gross Margin 7,246 6,975 (4)% Advertising and promotions spend (1,939) (1,872) (3)% Contribution after A&P spend 5,307 5,103 (4)% Structure costs (1,959) (1,987) +1% Profit from Recurring Operations 3,34
Slide 43: Profit from Recurring Operations by Region (1/2)
Profit from Recurring Operations by Region (1/2) World (€ millions) FY23 FY24 Change Organic Growth Group Structure Forex impact Net Sales 12,137 100.0% 11,598 100.0% (539) (4)% (150) (1)% +395 +3% (784) (6)% Gross margin 7,246 59.7% 6,975 60.1% (271) (4)% +37 +1% +265 +4% (573) (8)% Advertising & p
Slide 44: Profit from Recurring Operations by Region (2/2)
Profit from Recurring Operations by Region (2/2) Asia / Rest of the World (€ millions) FY23 FY24 Change Organic Growth Group Structure Forex impact Net Sales 5,191 100.0% 4,973 100.0% (218) (4)% +167 +3% +111 +2% (496) (10)% Gross margin 2,969 57.2% 2,851 57.3% (117) (4)% +155 +5% +126 +4% (398) (13
Slide 45: Foreign Exchange Impact
Foreign Exchange Impact Average rates evolution On Profit from Forex impact FY24 On Net Sales Recurring (€ millions) FY23 FY24 % Operations US Dollar USD 1.05 1.08 (3.3)% (95) (52) Chinese Yuan CNY 7.28 7.82 (7.3)% (82) (49) Indian Rupee INR 85.49 89.89 (5.1)% (72) (24) British Pound GBP 0.87 0.86 +
Slide 46: Sensitivity of profit and debt to EUR/USD exchange rate
Sensitivity of profit and debt to EUR/USD exchange rate Estimated impact of a 1% appreciation of the USD Impact on the income statement(1) (€ millions) Profit from recurring operations +16 Financial result (1) Pre-tax profit from recurring operations +15 Impact on the balance sheet (€ millions) Incr
Slide 47: Balance Sheet: Assets
Balance Sheet: Assets Assets 30/06/2023 30/06/2024 (€ millions) (Net book value) Non-current assets Intangible assets and goodwill 19,000 19,039 Tangible assets and other assets 4,798 4,972 Deferred tax assets 1,870 1,713 Total non-current assets 25,667 25,725 Current assets Inventories 8,104 8,255
Slide 48: Balance Sheet: Liabilities and Shareholder's Equity
Balance Sheet: Liabilities and Shareholder’s Equity Liabilities and shareholders’ equity 30/06/2023 30/06/2024 (€ millions) Group Shareholders’ equity 15,717 15,749 Non-controlling interests 998 1,048 of which profit attributable to non-controlling interests 21 38 Total Shareholders’ equity 16,715 1
Slide 49: Analysis of Working Capital Requirement
Analysis of Working Capital Requirement June June June FY23 WC FY24 WC (€ millions) 2022 2023 2024 change* change* Aged work in progress 5,732 6,267 6,616 555 620 Advances to suppliers for wine and ageing spirits 8 12 20 2 9 Payables on wine and ageing spirits (115) (182) (163) (61) 11 Net aged work
Slide 50: Net Debt
Net Debt 30/06/2023 30/06/2024 (€ millions) Current Non-current Total Current Non-current Total Bonds 580 9,678 10,258 1,778 10,907 12,685 Commercial papers 801 - 801 196 - 196 Other loans and long-term debts 155 173 328 156 133 288 Other financial liabilities 956 173 1,129 352 133 485 Gross financi
Slide 51: Change in Net Debt
Change in Net Debt (€ millions) 30/06/2023 30/06/2024 Operating profit 3,265 2,724 Depreciation and amortisation 417 441 Net change in impairment of goodwill, PPE and intangible assets 52 495 Net change in provisions (74) (37) Changes in fair value on commercial derivatives and biological assets (87
Slide 52: Net Debt Maturity profile as of 30 June 2024
Net Debt Maturity profile as of 30 June 2024 €bn 52
Slide 53: Bond Details
Bond Details Currency Par value Coupon Issue date Maturity date € 650 m 2.125% 29/09/2014 27/09/2024 € 600 m 1.500% 17/05/2016 18/05/2026 € 1,000 m o/w : € 500 m 0.500% 24/10/2027 24/10/2019 € 500 m 0.875% 24/10/2031 € 2,000 m o/w : € 1,000 m 1.125% 07/04/2025 06/04/2020 € 1,000 m 1.750% 08/04/2030
Slide 54: Net debt / EBITDA evolution
Net debt / EBITDA evolution Closing rate Average rate(1) EUR/USD rate Jun FY23 -> Jun FY24 1.09 -> 1.07 1.05 -> 1.08 Ratio at 30/06/2023 2.7 2.7 EBITDA & cash generation excl. Group structure 0.1 0.1 effect and forex impacts Group structure and forex impacts 0.3 0.2 Ratio at 30/06/2024 3.1 3.1 (1) L
Slide 55: Net Diluted EPS
Net Diluted EPS (x 1,000) FY23 FY24 Number of shares in issue at end of period 255,632 253,329 Weighted average number of shares in issue (pro rata temporis) 257,537 255,570 Weighted average number of treasury shares (pro rata temporis) -1,488 -2,974 Dilutive impact of stock options and performance