Pernod Ricard SA · EURONEXT:RI
Pernod Ricard SA — FY2008/09 Earnings Presentation
74 slides from Pernod Ricard SA's earnings presentation, Sep 3, 2009
Slide 1: 2008/09 Full-Year Sales and Annual Results
2008/09 Full-Year Sales and Annual Results Strong sales and results growth, with the rapid and accretive integration of Vin&Sprit Group share of net profit from recurring operations > € 1 billion Rapid and significant debt reduction 3 September 2009 This presentation can be downloaded from our websi
Slide 2: 2008/09 Changes in the Environment
2008/09 Changes in the Environment Major financial and economic crisis with knock-on effects on: • Consumer spending • Access to credit, resulting in distributors reducing their inventories Resilience of the Wines & Spirits industry, with contrasting situations by country and category Appreciatio
Slide 3: 2008/09 Highlights
2008/09 Highlights Closing of the acquisition of Vin&Sprit on 23 July 2008 Negotiations with Fortune Brands and Maxxium Early takeover of Absolut’s distribution on 1 October 2008 Rapid response to the financial crisis: • Announcement of an asset disposal plan of € 1 billion (70% complete in sum
Slide 4: 2008/09 Key Figures
2008/09 Key Figures Sales: € 7,203 million (+9%), organic growth close to stable TOP 14: volume -4% , stable sales* Profit from recurring operations: € 1,846 million (+21%) due to 4% organic growth and € 272 million contribution from Vin&Sprit Very strong growth in operating margin to 25.6%, due
Slide 5: 2008/09 Key Figures
2008/09 Key Figures Group share of Net profit from recurring operations* : € 1,010 million (+13%), with the average cost of debt held at 4.8% Net profit - Group share: € 945 million (+13%) Very strong growth in Free Cash Flow from recurring operations to € 1,275 million Significant debt reductio
Slide 6: Presentation structure
Presentation structure - Group share of NPRO - Sales analysis - Profit from recurring operations - Summarised consolidated income statement - Analysis by geographic region - Group share of NPRO - Non-recurring items and net profit - Conclusion and outlook 6
Slide 7: 2008/09 Financial Year Sales Growth
2008/09 Financial Year Sales Growth (€ millions) 757 7,203 6,589 (26) (117) - -2% +12% +9% 07/08 Organic Forex Group 08/09 sales growth impact structure sales Organic growth: stable (Spirits stable, Wines -2%) Forex impact: fall in many currencies (GBP, KRW, INR, AUD, NZD, RUB, CAD, BRL, etc.) p
Slide 8: Analysis of 2008/09 Financial Year Sales
Analysis of 2008/09 Financial Year Sales Good sales performance overall, due to strong positions in emerging countries and market share gains in France (whisky & Champagne), Spain (whisky & gin), Germany, Ireland, Greece, Poland, China, India, Brazil, Mexico etc. Decline in HY2 (down 7%*), followi
Slide 9: Focus on 4th Quarter
Focus on 4th Quarter (€ millions) 159 1,646 1,498 (41) 30 -3% +2% + 11% +10% 07/08 Organic Forex Group 08/09 Q4 sales growth impact structure Q4 sales 3% organic sales decline (Spirits -2%, Wines -5%), a marked improvement vs Q3 (-12%) Forex impact: the appreciation of the USD and CNY was partly
Slide 10: Focus on 4th Quarter
Focus on 4th Quarter Economic background remaining 2.0% Quarterly growth in GDP (vs . Previous quarter) difficult and extremely volatile, 1.5% 1.0% 1.0% 0.8% in spite of early signs of recovery 0.5% 0.0% 0.4% 0.3% -0.5% -0.7% -1.0% -1.5% -2.0% -2.5% -3.0% -3.5% -4.0% CY08 vs. CY07 2008Q01 2008Q02
Slide 11: Organic growth by quarter during 2008/09
Organic growth by quarter during 2008/09 10 +7% 5 +3% 0 -5 -3% -10 -15 -12% -20 Q1 Q2 Q3 Q4 08/09 08/09 08/09 08/09 The crisis occurred gradually, with a slowdown with effect from Q2 Q3 suffered most from destocking 11
Slide 12: Portfolio Review
Portfolio Review TOP 15 Volume: - 4%* Sales stable* *Organic growth measured on TOP 14 excluding Absolut VODKA 12
Slide 13: Portfolio Review
Portfolio Review Annual volume: 10.2* million 9Lcs Integration of Absolut into the Pernod Ricard distribution network from 1 October 2008 and reorganisation of distributors in the US Nominal volume down 6% on non-comparable bases and including a destocking effect: •Decline in the US: year of trans
Slide 14: Portfolio Review
Portfolio Review Volume -5% Sales* -2% +2% for Chivas 18 and 25 y.o. vs -6% for Chivas 12 y.o. Asia: decline primarily due to China (destocking, Olympics effect), Japan and Duty Free; strong growth in the Persian Gulf and Vietnam Europe: difficult situation in Spain and Greece, slower growth in
Slide 15: Portfolio Review
Portfolio Review Volume +2% Sales* +8% US: continuing exceptional growth, confirmed by Nielsen +28% and NABCA +19% Slight decline in Europe with contrasting situations: decline in the two leading markets of Ireland and the UK, stable in France, and strong growth in Eastern Europe and Germany G
Slide 16: Portfolio Review
Portfolio Review Volume -6% Sales* +12% For the third year running, Martell benefited from a highly positive price mix effect over the 2008/09 financial year, and consolidated its leadership of the XO segment Strong growth due to China, Malaysia, Singapore, Indonesia and Vietnam Volume +5% Sales
Slide 17: Portfolio Review
Portfolio Review Volume -3% Sales* -2% France: slight decline of the brand due to difficulties in on-trade, stable off-trade volume Slight decline in all other European markets, affected by the decline in on-trade consumption Volume -5% Sales* -1% Spain: shipments in slight decline, by 2%, in
Slide 18: Portfolio Review
Portfolio Review Volume -9% Sales* -7% US: shipments down 15% (Nielsen up 0.5%), severe destocking and decline in “casual on-trade” Europe: decline in the UK, France and Spain in a difficult market, but growth in Germany, Austria and Italy Strong growth in Latin America and Oceania Volume -15%
Slide 19: Portfolio Review
Portfolio Review Volume -2% Sales* stable UK: continuing implementation of the value strategy and market share gains, shipments down 3% in line with Nielsen (on-trade -8% and off-trade -1%). By value, Nielsen was down 1% in on-trade and up 2% in off-trade. US: Nielsen volume up 1% in a market do
Slide 20: Portfolio Review
Portfolio Review Volume -4% Sales* +3% Good performance in France where Mumm became leader with stable volume and price increases (Nielsen up 1% in a market down 1% in value since the start of the financial year) Slight volume growth in all markets except the Americas Volume -13% Sales* -11% U
Slide 21: Key Local Brands
30 Key Local Brands Our portfolio of 30 key local brands is a solid foundation at times of economic crisis: volume down 1% over 2008/09 Some very good performances: Royal Stag in India (+22%), Something Special in Latin America (+18%), Wyborowa in Poland (+17%), Clan Campbell in France (+8%) … …
Slide 22: Presentation structure
Presentation structure - Group share of NPRO - Sales analysis - Profit from recurring operations - Summarised consolidated income statement - Analysis by geographic region - Group share of NPRO - Non-recurring items and net profit - Conclusion and outlook 22
Slide 23: Summarised Consolidated Income Statement
Summarised Consolidated Income Statement FY FY ∆ ∆ (€ millions) 07/08 08/09 organic Sales 6,589 7,203 +9% - Gross margin after logistics costs 3,766 4,208 +12% -1% GM / sales 57.2% 58.4% Advertising & promotion expenditure (1,178) (1,237) +5% -7% A&P / sales 17.9% 17.2% Contribution after A&P expend
Slide 24: Foreign Exchange / Group Structure Effects
Foreign Exchange / Group Structure Effects FY Organic Forex Group FY (€ millions) 07/08 growth impact structure 08/09 Sales 6,589 (26) (117) 757 7,203 Profit from recurring operations 1,522 53 67 205 1,846 Negative foreign exchange effect on sales but positive on PRO, due to the depreciation of GB
Slide 25: Accelerated Implementation of Synergies relating to Vin&Sprit
Accelerated Implementation of Synergies relating to Vin&Sprit Total synergies confirmed at € 150 million, including: • Distribution margin € 70 million • Structure € 80 million Synergies are being achieved at a faster pace than anticipated, with € 110 million from the 2008/09 financial year 25
Slide 26: Gross Margin after Logistics Costs
Gross Margin after Logistics Costs FY Organic FY (€ millions) 07/08 growth 08/09 Gross margin after logistics costs 3,766 -0.7% 4,208 GM / sales 57.2% 58.4% +120bps Further very strong improvement in gross margin after logistics costs / sales, despite price rises of certain raw materials: glass, g
Slide 27: Advertising & Promotion Expenditure
Advertising & Promotion Expenditure FY Organic FY (€ millions) 07/08 growth 08/09 A&P expenditure (1,178) -7% (1,237) A&P / sales 17.9% 17.2% -70 bps Slight decrease in the advertising & promotion expenditure / sales ratio, due to: • Declining cost of media • Reduced level of activity in on-trade
Slide 28: Contribution after A&P Expenditure
Contribution after A&P Expenditure FY Organic FY (€ millions) 07/08 growth 08/09 Contribution after A&P expenditure 2,588 +2% 2,971 CAAP / sales 39.3% 41.2% +190bps As anticipated, the integration of Vin&Sprit generated a strong increase in the contribution and contribution margin of the portfolio
Slide 29: Structure Costs
Structure Costs Organic FY (€ millions) FY 07/08 growth 08/09 Structure costs* (1,066) +0% (1,125) Structure costs / sales 16.2% 15.6% * Structure costs: Selling expenses + General and administrative expenses + Other income/(expenses) - 60bps Further significant 60 bps reduction in the structure c
Slide 30: Profit from Recurring Operations
Profit from Recurring Operations FY Organic FY (€ millions) 07/08 growth 08/09 Profit from recurring operations 1,522 4% 1,846 PRO / sales 23.1% 25.6% + 250bps Sharply improved operating margin (+250bps) Organic growth: +4% Change in group structure: +13% Outstanding PRO growth (+21%) Forex
Slide 31: Presentation structure
Presentation structure - Group share of NPRO - Sales analysis - Profit from recurring operations - Summarised consolidated income statement - Analysis by geographic region - Group share of NPRO - Non-recurring items and net profit - Conclusion and outlook 31
Slide 32: Contribution to Growth / Region
Contribution to Growth / Region Profit from recurring operations (€ millions) 18 1,575 28 - 7 33% 1,522 0% 14% 53% 100% PRO FY 07/08 Asia & RoW Americas Europe France PRO FY 08/09 on a like-for-like basis Very strong contribution of Asia & RoW and France to growth* in profit from recurring operati
Slide 33: Asia – Rest of World
Asia – Rest of World FY FY (€ millions) 07/08 08/09 ∆ Organic growth Sales(1) 2,007 2,023 +1% +2% Gross margin after logistics costs 1,040 1,136 + 9% +4% GM / sales 51.8% 56.1% A&P expenditure (383) (383) - -5% A&P / sales 19.1% 18.9% Profit from recurring operations(2) 422 495 +17% +7% PRO / sales
Slide 34: Asia – Rest of World
Asia – Rest of World Very strong organic growth in China, enhanced by a highly favourable mix / quality effect for Martell Very strong growth also in India with local brands Good performance of Australia, South Africa and the Middle East ... … which largely offset the difficulties experience
Slide 35: Americas
Americas FY FY Organic (€ millions) 07/08 08/09 ∆ growth Sales 1,700 2,027 +19% -1% Gross margin after logistics costs 961 1,253 +30% -2% GM / sales 56.5% 61.8% A&P expenditure (284) (346) +22% -4% A&P / sales 16.7% 17.0% Profit from recurring operations(1) 421 636 +51% - PRO / sales 24.8% 31.4% (1)
Slide 36: Europe (excluding France)
Europe (excluding France) FY FY Organic (€ millions) 07/08 08/09 ∆ growth Sales 2,171 2,417 +11% -3% Gross margin after logistics costs 1,269 1,302 +3% -5% GM / sales 58.4% 53.8% A&P expenditure (340) (339) - -14% A&P / sales 15.7% 14.0% Profit from recurring operations(1) 530 537 +1% +1% PRO / sale
Slide 37: France
France FY FY Organic (€ millions) 07/08 08/09 ∆ growth Sales 711 735 +3% +2% Gross margin after logistics costs 496 518 +5% +2% GM / sales 69.7% 70.5% A&P expenditure (170) (170) -1% -3% A&P / sales 24.0% 23.1% Profit from recurring operations(1) 149 178 +19% +12% PRO / sales 21.0% 24.2% (1) head of
Slide 38: Analysis by Geographic Region
Analysis by Geographic Region Sales Profit from recurring operations FY 07/08 FY 07/08 11% 10% 30% 28% France 33% Europe 35% 26% FY 08/09 Americas 27% FY 08/09 10 % 28% Asia and 27% 10 % RoW 29% 34% 28% 34% Strong increase in the relative weight of the Americas in the profit from recurring operation
Slide 39: Significance of New Economies over 2008/09
Significance of New Economies over 2008/09 Sales Profit from recurring operations FY 08/09 FY 08/09 New 3 1% economies 3 1% Mature markets 69% 69% Sales in the new economies posted 9% organic growth over the period These markets are just as profitable as mature markets This illustrates the stron
Slide 40: Presentation structure
Presentation structure - Group share of NPRO - Sales analysis - Profit from recurring operations - Summarised consolidated income statement - Analysis by geographic region - Group share of NPRO - Non-recurring items and net profit - Conclusion and outlook 40
Slide 41: Financial Income/(expense) from Recurring Operations
Financial Income/(expense) from Recurring Operations FY FY (€ millions) 07/08 08/09 Net financing costs (316) (581) Other financial income/(expense) from recurring operations (17) (38) Financial income/(expense) from recurring operations (333) (619) Increase in finance expense due to higher debt f
Slide 42: Free Cash Flow
Free Cash Flow (€ millions) FY 07/08 FY 08/09 Profit from recurring operations 1,522 1,846 Depreciation, provision movements and other 181 141 Self financing capacity (SFC) from recurring operations 1,703 1,987 Decrease (increase) in WCR (533) 246 Financial income/(expense) and taxes (470) (760) Acq
Slide 43: Free Cash Flow
Free Cash Flow The very strong Free Cash Flow generation over the 2008/09 financial year was due in particular to the sharp fall in working capital requirements (down € 246 million vs up € 533 million in 2007/08), including: • The implementation of factoring and disposal of receivables programmes
Slide 44: Change in Net Debt
Change in Net Debt (5,933) (12,076) 1,037 (€ millions) 373 (922) (10,888) 700 (6,143) a l t m ns at i t c r ow ta s n at 9 bt S pr pa o fo Fl tio i ap i end a tio t t b .0 de .08 n& n i m r l p eb t sh uis e c vi d sl en De .06 l a 6 Vi itio a Ca q a r i a n m 30 niti 0.0 iti d e e / ac r s Sh - D T
Slide 45: Net Debt Aged Analysis at 30 June 2009
Net Debt Aged Analysis at 30 June 2009 At 30 June 2009, Pernod Ricard held about € 520 million in cash, € 1.5 billion in available undrawn credit lines and benefits from very long maturity terms on its debt FY € billions 2009/10 - 2010/11 1.0 2011/12 1.7 2012/13 0.2 2013/14 7.2 2014/15/… 0.8 Total
Slide 46: Net Debt Hedging at 30 June 2009
Net Debt Hedging at 30 June 2009 Analysis of net debt: variable, capped variable and fixed rates Variable rates Capped Fixed rates variable rates EUR 52% 14% 34% USD 23% 35% 42% Total 32% 27% 41% The variable portion of the debt decreased following the € 1 billion share capital increase of 14 Ma
Slide 47: Income Tax
Income Tax Income tax: € (108) million Income tax on items from Income tax on non-recurring recurring operations: € (204) million items: Rate: 16.6% € 96 million Decrease in effective taxation rate on recurring operations to 16.6%, following the acquisition of Vin&Sprit. Likely return to a rate cl
Slide 48: Minority Interests & Other
Minority Interests & Other FY 07/08 FY 08/09 (€ millions) Minority interests (29) (21) Other - 8 Minority interests include in particular: • Havana Club • Corby (Canada) • JBC (South Korea) In 2008/09, other items included: • Profits and losses of disposed brands: Cruzan, Grönstedts, Dry Anis,et
Slide 49: Group share of Net Profit from Recurring Operations
Group share of Net Profit from Recurring Operations (€ millions) FY FY ∆ 07/08 08/09 Profit from recurring operations 1,522 1,846 +21% Financial income/(expense) from recurring operations (333) (619) +86% Income tax on items from recurring operations (263) (204) -23% Minority interests and other (29
Slide 50: Net Earnings per share from Recurring Operations - Group share
Net Earnings per share from Recurring Operations - Group share FY FY (1) FY (€ millions and €/share) 07/08 07/08 08/09 Diluted number of shares (thousands) 217,234 230,321 236,491 +3% Net profit from recurring operations 897 897 1,010 +13% Diluted net earnings per share from 4.13 3.89 4.27 +10% re
Slide 51: Dividend: € 0.50 / share – Distribution of Free Shares
Dividend: € 0.50 / share – Distribution of Free Shares € 04/05(1) 05/06(1) 06/07(1) 07/08(1) 08/09 Proposed 0.84(2) 0.99 1.19 1.24 0.50 dividend 08/09 dividend submitted for approval to the AGM of 2 November 2009 As per our communication of 8 April 2009 announcing the € 1 billion share capital inc
Slide 52: Presentation structure
Presentation structure - Group share of NPRO - Profit from recurring operations - Summarised consolidated income statement - Analysis by geographic region - Financial income/(expense) from recurring operations and debt - Other items of net profit - Group share - Group share of NPRO - Non-recurring i
Slide 53: Non-Recurring Items
Non-Recurring Items Restructuring costs and expenses primarily attributable to the acquisition of Vin&Sprit (€ millions) FY 08/09 Capital gains and losses on disposals and asset valuations • Wild Turkey, Bisquit, etc. 225 • Impact of impairment tests on intangible assets; primarily Spanish wines (
Slide 54: Net Profit - Group share
Net Profit - Group share FY FY (€ millions) 07/08 08/09 Profit from recurring operations 1,522 1,846 +21% Other operating income and expenses (81) (89) NS Operating profit 1,441 1,757 +22% Financial income/(expense) from recurring operations (333) (619) +86% Other financial items (16) (71) NS Inco
Slide 55: Conclusion and outlook
WM, 38 Pernod Ricard Ny Conclusion and outlook SS — OS
Slide 56: Conclusion for the 2008/09 Financial Year
Conclusion for the 2008/09 Financial Year A highly satisfactory 2008/09 financial year in a difficult environment: • Good sales performance, confirming the strength of Pernod Ricard’s portfolio and commercial network • Rapid and accretive integration of Vin&Sprit and Absolut Vodka • Outstanding inc
Slide 57: 2009/10 Outlook
2009/10 Outlook For 2009/10, we anticipate: • A general economic environment that will remain difficult, and an overall stagnation of the Wines & Spirits industry, with contrasting situations depending on countries and categories • An unfavourable comparison basis in the first half-year 2009/10, in
Slide 58: 2009/10 Outlook
2009/10 Outlook We start the 2009/10 financial year with confidence: • The Group’s strategy is effective: Reach of our global network Quality of our portfolio Brand building marketing and sales expertise Excellence of our decentralised business model Commitment of our personnel, bound together
Slide 59: 2009/10 Outlook
2009/10 Outlook • The strategic brand / market combinations will benefit from strong advertising and promotion expenditures in 2009/10 • Numerous marketing initiatives are ongoing and/or planned, including: New marketing platforms: Mumm and Jacob’s Creek New packaging: Chivas Regal 12 years old, H
Slide 60: 2009/10 Outlook
2009/10 Outlook • Many other actions have been initiated to reduce costs, including: Limitation of raw material price increases Adaptation of structures Rigorous wage and salary policy Vin&Sprit synergies Reduction of the average cost of borrowing to a level close to 4.5%* * based on current in
Slide 61: 2009/10 Outlook
2009/10 Outlook The Group’s priorities today are: • Strengthening advertising and promotion investment behind strategic brands • Reducing the debt Continuation of the € 1 billion asset disposal programme (€ 700 million realised to date including the sale of Tia Maria for € 125 million in July 2009
Slide 62: 2009/10 Financial Year Guidance
2009/10 Financial Year Guidance In line with our practice, we will communicate our results guidance for the current year at the Annual General Meeting, which will be held this year on 2 November 62
Slide 63: Pernod Ricard
Pernod Ricard / 2S Pernod Ricard
Slide 64: Appendices
WM, = Pernod Ricard ny Appendices SS aS
Slide 65: Strategic Brands Sales Growth
Strategic Brands Sales Growth Volumes FY 2007/2008 Volumes FY 2008/2009 Net Sales organic Volume growth (*) growth (*) (Million of 9 litre cases) (Million of 9 litre cases) Absolut (**) 10.2 Chivas Regal 4.5 4.2 -5% -2% Ballantine's 6.4 6.2 -4% -5% Ricard 5.6 5.4 -3% -2% Martell 1.6 1.5 -6% 12% Mali
Slide 66: 2008/09 Full-Year Sales
2008/09 Full-Year Sales (€ millions) FY 2007/08 FY 2008/09 Variation Organic Growth Group Structure Forex impact Wines & Spirits France 711 10.8% 735 10.2% 24 3.4% 17 2.4% 8 1.1% (0) 0.0% Wines & Spirits Europe excl. France 2,171 33.0% 2,417 33.6% 246 11.3% (60) -2.9% 396 18.2% (90) -4.1% Wines & Sp
Slide 67: Summarised Consolidated Income Statement
Summarised Consolidated Income Statement (€ millions) 30/06/2008 30/06/2009 Change Net sales 6,589 7,203 9.3% Gross Margin after logistics costs 3,766 4,208 11.7% A&P expenditure (1,178) (1,237) 5.1% Contribution after A&P expenditure 2,588 2,971 14.8% Structure costs (1,066) (1,125) 5.5% Profit fro
Slide 68: Foreign Exchange Effect
Foreign Exchange Effect Average rates evolution On Profit from Forex impact FY On Net Sales Recurring (€ million) Operations A07/08 A08/09 % US Dollar USD 1.47 1.37 -6.7% 72.7 37.3 British Pound GBP 0.73 0.86 16.7% (68.7) 20.9 Korean Won KRW 1.40 1.75 24.5% (52.6) (14.4) Indian Roupie INR 59.08 65.1
Slide 69: Group Structure Effect
Group Structure Effect On Profit Group structure FY from On Net Sales (€ millions) Recurring Operations V&S acquisition 914.5 271.9 Other (157.9) (67.3) Total Group Structure 756.6 204.6 69
Slide 70: Consolidated Balance Sheet 1/2
Consolidated Balance Sheet 1/2 Assets 30/06/2008 30/06/2009 (€ millions) (Net book value) Non-current assets Intangible assets and goodwill 10,341 16,199 Property, plant and equipment and investments 1,822 1,940 Deferred tax assets 722 1,111 Total non-current assets 12,885 19,250 Current assets Inve
Slide 71: Consolidated Balance Sheet 2/2
Consolidated Balance Sheet 2/2 Liabilities and shareholders’ equity 30/06/2008 30/06/2009 (€ millions) Shareholders’ equity 6,420 7,431 Minority interests 177 185 of which profit attributable to minority interests 29 21 Shareholders’ equity – attributable to equity holders of the parent 6,597 7,615
Slide 72: Change in Net Debt
Change in Net Debt € millions 30/06/2008 30/06/2009 12 months 12 months Self-financing capacity 1,537 1,782 Decrease (increase) in working capital requirements (533) 246 Financial income/(expense) and taxes (501) (794) Acquisition of PPE, intangible assets and other (188) (197) Free Cash Flow 315 1,
Slide 73: Analysis of Net Debt at 30 June 2009
Analysis of Net Debt at 30 June 2009 Analysis of debt by nature Syndicated loan 74% Bonds 23% Miscellaneous (including cash) 3% Total 100% Analysis of debt by currency % Euro 50% % USD 58% % Other currencies (8)*% Total 100% * Primarily temporary positions on GBP and SEK 73
Slide 74: Number of shares included in EPS calculation
Number of shares included in EPS calculation (in thousands) FY FY (1) FY 07/08 07/08 08/09 Number of shares in issue at end of period 219,683 219,683 258,641 Weighted number of shares in issue (pro rata temporis) 219,460 232,686 236,359 Number of treasury shares (5,413) (5,739) (1,488) Dilutive impa