Pernod Ricard SA · EURONEXT:RI
Pernod Ricard SA — FY2007/08 Earnings Presentation
46 slides from Pernod Ricard SA's earnings presentation, Jul 24, 2008
Slide 1: 2007/08 Full-year Sales
2007/08 Full-year Sales 24 July 2008 1
Slide 2: 2007/08 sales: €6,589 million, outstanding growth +8.7%
2007/08 Full-year Sales 2007/08 sales: € 6,589 million Outstanding growth: +8.7%* Upward revision of the guidance of organic growth in operating profit from ordinary activities *Organic growth 2
Slide 3: Presentation Structure
Presentation Structure - Overall analysis - Portfolio review - Growth by region - Conclusion and outlook 3
Slide 4: Key Figures at 30 June 2008
Key Figures at 30 June 2008 ÎFull-year sales up 2.3% to € 6,589 million, being +8.7% organic growth ÎStrong growth by key brands with a very strong mix and improved pricing effect Top 15: Volume +5%, Value +11%* ÎEmerging markets** (+22%*) and premium spirits*** (+14%*) remained the leading growth d
Slide 5: Environment
Environment ÎContinuing strong growth in emerging countries ÎWestern markets continued to grow at a more moderate pace ÎStrong appreciation of the Euro against most currencies, in particular the USD, GBP and KRW ÎEnd of USD interest rate decreases and slight rise in the Euro, against a background of
Slide 6: An Outstanding Year
An Outstanding Year ÎSignature, on 30 March 2008, of a contract pertaining to the full acquisition of the Vin & Sprit group, owner of the ABSOLUT vodka brand (transaction closed on 23 July 2008) ÎContinuing strong growth of our operations in all regions and continuing premiumisation of our portfolio
Slide 7: Dynamic sales at 30 June 2008
Dynamic sales at 30 June 2008 547 (297) (€ millions) (104) 6,589 6,443 -4.6% -1.6% +8.7% +2.3% 06/07 FY Organic Forex Group 07/08 FY sales growth impact structure sales ÎOrganic growth: +8.7% (Spirits = +9.3%, Wines = +5.6%) ÎGroup structure: disposal of LDI (€ 31 million), disposal of Rich & Rare (
Slide 8: Foreign exchange and group structure effects on operating profit
Foreign exchange and group structure effects on operating profit from ordinary activities Over the full 07/08 financial year Î Negative forex impact on operating profit from ordinary activities confirmed at about € 105 million Î Negative group structure effect on operating profit from ordinary activ
Slide 9: Continuing strong organic growth in Q4
Continuing strong organic growth in Q4 (€ millions) 103 (123) 1,544 (26) 1,498 -7.9% - 1.7% +6.8% - 3.0% 06/07 Organic Forex Group 07/08 Q4 sales growth impact structure Q4 sales Î Organic growth of +6.8% (Spirits = +7.8%, Wines = +2.3%) Î Negative group structure impact on Q4, in line with expectat
Slide 10: Focus on Q4
Focus on Q4 Continuing strong growth in Q4: • Emerging markets continued their very fast expansion, in spite of the earthquake in Sichuan (impact of about -1% on our growth over the quarter) • The US remained well oriented, against an economic background that remains difficult • Slight growth overal
Slide 11: Focus on HY1 and HY2
Focus on HY1 and HY2 (€ millions) 348 (88) (54) 3,713 3,507 -2.5% -1.5% +10% Following a very strong +5.9% HY1, sustained growth was 06/07 Organic Forex Group 07/08 HY1 growth impact structure HY1 maintained over HY2, sales sales against a background of (€ millions) 200 (209) further appreciation of
Slide 12: Organic growth / Region
Organic growth / Region Asia / RoW 16% 12% +12.6% +12.7% Strong double-digit growth, both in HY1 and HY2. 8% 4% 0% HY1 HY2 Americas 15% +9.7% Slightly slower HY2 growth in the US and +6.2% 10% 5% impact of the slowdown in Venezuela. 0% HY1 HY2 Europe Growth still exceeding 20% in Central and Eastern
Slide 13: Vin & Sprit Closing
Vin & Sprit Closing ÎExcellent commercial and financial prospects linked to the integration of ABSOLUT (enthusiasm of the salesforce) ÎConfidence in achieving the top end of the range cost synergies announced (€ 125 to € 150 million) ÎTransaction • Authorisation from competition authorities on 17 Ju
Slide 14: An Absolutely outstanding performance in 2008
An Absolutely outstanding performance in 2008 HY1 2008 volume growth: + 12 % 11.3 million 9L cases over a rolling 12 months + 600 000 9L cases gained over 6 months Î Acceleration of volume growth at + 12% in HY1 2008 compared to + 9% over the full year 2007 Î Performance confirmed by Nielsen 12 mont
Slide 15: Provisional post-closing Vin & Sprit pro-forma debt
Provisional post-closing Vin & Sprit pro-forma debt Î Sharp decline in debt at 30 June 2008, resulting in a Net Debt / EBITDA ratio expected at about 3.6 Î After the acquisition of Vin & Sprit, the pro-forma debt* at 30 June 2008 is about € 11.9 billion, being an opening Net Debt / EBITDA ratio of c
Slide 16: Provisional cost of consolidated post-closing Vin & Sprit debt
Provisional cost of consolidated post-closing Vin & Sprit debt ÎInitial average cost of about 5.2 %, based on: • current interest rates • the initial margins (120 to 155 bp) on the new syndicated acquisition loan • interest rate hedges put in place ÎExpected rapid decline in Net Debt / EBITDA ratio,
Slide 17: Presentation Structure
Presentation Structure - Overall analysis - Portfolio review - Growth by region - Conclusion and outlook 17
Slide 18: Portfolio Review
Portfolio Review TOP 15 Full-year volume: + 5 % Full-year sales: + 11 %* *Organic growth 18
Slide 19: Top 15 growth: 07/08 vs 06/07
Top 15 growth: 07/08 vs 06/07 VOLUME 12% +9% A dynamic Top 15 8% +5% 4% Favourable comparison basis in FY 06/07 0% FY 06/07 FY 07/08 SALES * 20% 16% +13% 12% +11% Sales growth more than double that of 8% 4% volume growth 0% FY 06/07 FY 07/08 Highly favourable mix and pricing effects for all our stra
Slide 20: Portfolio Review
Portfolio Review Volume +10% Sales* +11% Chivas 18 and 25 year old grew by +42% vs +9% for Chivas 12 year old Î Asia: • Growth due in particular to Thailand, Duty Free, Vietnam and the Persian Gulf • Decline in China, due to the repercussions of the Sichuan earthquake Î Europe: • Strong growth in We
Slide 21: Portfolio Review
Portfolio Review Volume +9% Sales* +11% Î Ballantine’s Finest: • Western Europe: Ö Growth in France, Switzerland, Portugal and Greece, stability in Spain, decline in Italy and Germany Ö Good performance by Duty Free • Rapid expansion in numerous Central and Eastern European countries: Poland, Russia
Slide 22: Portfolio Review
Portfolio Review Volume +15% Sales* +21% Î Continuing outstanding development in the US with 12-month depletions +24% (Nielsen +29%, NABCA +20%) Î Very strong growth in South Africa Î Double-digit growth in Europe, due in particular to Ireland, Eastern Europe, Portugal and Duty Free Volume +10% Sale
Slide 23: Portfolio Review
Portfolio Review Volume +2% Sales* +24% Value Strategy stepped up Î Superior qualities: volume + 21% • Rapid development in Asia: China, Malaysia, Singapore, Taiwan, Vietnam, … • Top premium qualities posted the most outstanding growth rates: VSOP (+5%), Noblige (+76%), Cordon Bleu (+ 18%), XO (+29%
Slide 24: Portfolio Review
Portfolio Review Volume -3% Sales* -1% Î France: slight decrease of the brand in a declining market, adversely affected by bad weather and the smoking ban Î Slight decrease also in all other European markets Volume +15% Sales* +17% Î Double-digit growth in all regions Î In Europe: double-digit growt
Slide 25: Portfolio Review
Portfolio Review Volume +6% Sales* +10% Î Growth in Europe: UK, Spain, Belgium, Italy, Russia, Poland and Duty Free Î Dynamic sales in the US: 12-month depletions +5% (Nielsen +5%, NABCA +7%) Volume -4% Sales* -5% Î US: Situation remains difficult, 12-month depletions -7% (Nielsen +2%, NABCA -3%) Î
Slide 26: Portfolio Review
Portfolio Review Volume +1% Sales* +4% Î Europe: • Spain: slight volume growth in a declining category • Strong growth in other key markets: UK, Russia, Czech Republic Î US: market that remains difficult, 12-month depletions -3% (Nielsen -0.5%, NABCA -3%) Volume +9% Sales* +12% Î US: sales growth en
Slide 27: Portfolio Review
Portfolio Review Volume +2% Sales* +6% Growth and premiumisation Î Volume growth in the UK, its top market, with a Q4 in decline, impacted by the increase in duties Î Strong growth in Asia and Canada Î 17% growth in superior qualities (3 Vines, Reserve, Heritage, Sparkling), which account for nearly
Slide 28: Portfolio Review
Portfolio Review Volume +11% Sales* +18% Î Confirmed strong growth in the French market with market share gains in off-trade and on- trade (growth would have been even higher without stock limitation) Î Decline in the UK, but strong growth in Italy, Spain, Switzerland and Russia Volume +3% Sales* +1
Slide 29: Other spirit brands
Other spirit brands Î Royal Salute in Asia and Olmeca and Ararat in Eastern Europe remained growth drivers in these regions Î Ruavieja in Spain and Wyborowa in Poland also developed strongly Î Royal Stag remained a powerful growth driver in India and 100 Pipers sharply slowed down its decline in Tha
Slide 30: Wine business excluding fortified wines and champagne
Wine business excluding fortified wines and champagne: Total wines excluding fortified Renewed growth and continuing implementation of the value strategy & Champagne * 6% +3.7% 4% 2% -0.5% Renewed wine business growth 0% -2% FY 06/07 FY 07/08 Jacob's Creek + Montana + Campo Viejo * Our international
Slide 31: Presentation structure
Presentation structure - Overall analysis - Portfolio review - Growth by region - Conclusion and outlook 31
Slide 32: Contribution to organic growth / Region
Contribution to organic growth / Region 31 6,990 140 139 6% 237 6,443 26% 25% 43% 100% Asia & Americas Europe France FY 07/08 FY 06/07 RoW on a like-for-like basis ÎAll regions contributed to sales organic growth ÎEmerging markets remained responsible for nearly 2/3 of organic growth 32
Slide 33: Asia – Rest of World
Asia – Rest of World Organic Forex Group € millions 06/07 07/08 growth impact structure FY 1,884 2,007 +13% -6% - Î Asia: continuing vigorous 14%* growth (+15%* in Q4) • China (sales +29%*) and India (sales +39%*) represented 2/3 of Asia – RoW growth and remained the number one and number two contri
Slide 34: Americas
Americas Organic Forex Group € millions 06/07 07/08 growth impact structure FY 1,786 1,700 +8% -8% -4% Î North America: organic growth +5.0% (spirits +4.4%, wines +9.6%) US: on-trade markets in decline with transfer to the off-trade • Dynamic brands continued their vigorous growth: 9 Spirits: Jameso
Slide 35: Europe
Europe Organic Forex Group € millions 06/07 07/08 growth impact structure FY 2,091 2,171 +7% -2% -1% Î Eastern Europe and Central Europe: • Russia, Poland, Ukraine, Kazakhstan and Romania were the main contributors to the spectacular development of Eastern Europe and Central Europe • Russia (sales +
Slide 36: France
France Organic Forex Group € millions 06/07 07/08 growth impact structure FY 682 711 +5% - - Î Excellent performance of our whisky brands: Chivas, Ballantine’s, Jameson, The Glenlivet, and Clan Campbell, in well-orientated markets Î Mumm: very strong growth (market share gains, price increases, favo
Slide 37: Analysis of net sales by geographic region
Analysis of net sales by geographic region FY 06/07 FY 07/08 11% France 11% 29% 30% Europe 32% Americas 33% Asia and 28% RoW 26% Î The dynamism of Asian and Central and Eastern Europe enabled the Asia / RoW and Europe regions to increase their relative size over the period Î The weak USD and the Gro
Slide 38: Presentation Structure
Presentation Structure - Overall analysis - Portfolio review - Growth by region - Conclusion and outlook 38
Slide 39: Conclusion
Conclusion ÎAn outstanding year 2007/08, marked by: • Very dynamic emerging markets • Continuing growth in Western Europe, with a limited slowdown vs 06/07 and satisfactory growth of most of our premium brands in the US • Increase of the operating margin linked to the very favourable effects of impr
Slide 40: Outlook
Outlook ÎContinuing strong growth in emerging markets ÎMore contrasting western markets, experiencing moderate growth overall ÎConfidence in the success of the integration of Vin & Sprit: • Development of the ABSOLUT brand • Achievement of synergy objectives • Rapid debt reduction, supported by the
Slide 41: Pernod Ricard
83 Pernod Ricard
Slide 42: Appendices
My — Pernod Ricard Appendices 6 OS
Slide 43: Strategic brands volume and organic growth
2007/08 Full-year Sales Strategic brands volume and organic growth Volumes Volumes Net Sales June YTD 2007/08 (Million of 9 litre change organic growth cases) Chivas Regal 4,5 10% 11% Ballantine's 6,4 9% 11% Ricard 5,6 -3% -1% Martell 1,6 2% 24% Malibu 3,7 6% 10% Kahlua 2,1 -4% -5% Jameson 2,6 15% 2
Slide 44: 2007/08 Full-year Sales by region
2007/08 Full-year Sales June YTD 2006/07 June YTD 2007/08 Variation Organic Growth Group Structure Forex impact Wines & Spirits France 682 11% 711 11% 29 4% 31 5% (2) 0% (0) 0% Wines & Spirits Europe excl. France 2 091 32% 2 171 33% 81 4% 140 7% (23) -1% (36) -2% Wines & Spirits Americas 1 786 28% 1
Slide 45: Forex impact analysis
2007/08 Full-year Sales Forex impact analysis Forex % of total impact impact (€ million) US Dollar USD (145,3) 49,0% Korean Won KRW (47,4) 16,0% British Pound GBP (39,2) 13,2% Chinese Yuan CNY (16,6) 5,6% Mexican Peso MXN (16,2) 5,5% Argentinian Peso ARS (7,7) 2,6% Russian rouble RUB (7,0) 2,4% Sout
Slide 46: Group structure analysis
2007/08 Full-year Sales Group structure analysis € million Disposal Seagram Coolers & Smooth USA (22,0) End of Copacking Agreement Fortune Brands (20,2) Disposal LDI USA (30,9) Disposal Rich & Rare (16,7) Disposal Beirao (8,3) Others (6,3) Group Structure (104,4) 46