Pernod Ricard Sa · EURONEXT:RI
Pernod Ricard Sa — Pernod Ricard S A — Q2 2024 Earnings Presentation
42 slides from Pernod Ricard Sa's earnings presentation, Feb 15, 2024
Slide 1: Growth data specified in this presentation refers to organic growth, unless otherwise stated. Data
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 2: Robust performance, steering through spirits market normalization
Robust performance, steering through spirits market normalization Organic Sales -3% (reported -7%), Organic PRO -3% (reported -12%)1 Lower H1 Sales on high comparable basis End of post-Covid super cycle across geographies Transition year in the USA with continued market normalization compounded by i
Slide 3: Robust financial performance in a context of markets' normalisation
Robust financial performance in a context of markets’ normalisation Sales Organic -3% Group Share of Net Profit -12% €6,590m Reported -7% €1,569m PRO Organic -3% EPS -16% €2,144m Reported -12% €5.68 Free Cash Flow Net Debt / EBITDA -68% +0.7X €301m 3.3X 3
Slide 4: Premium portfolio driving high-single digit pricing in all regions
Premium portfolio driving high-single digit pricing in all regions, offset by lower volumes and adverse market mix Holding or gaining share in many markets Americas Europe ASIA ROW Group excl OSG1 OSG OSG1 OSG Russia -7% -4% +1% +1% -3% Price/mix2 Price/mix Price/mix Price/mix HSD LSD MSD MSD Weight
Slide 5: Robust performance in H1 FY24, following two years of outstanding growth
Robust performance in H1 FY24, following two years of outstanding growth, with markets normalizing Group Net Sales CAGR since H1 FY211 +8% Americas Europe ASIA ROW CAGR since CAGR since CAGR since H1 FY211 H1 FY211 H1 FY211 +4% +7% +11% +14% +22% +38% 123 128 137 138 121 122 114 114 116 106 2 2 107
Slide 6: Consumer centricity fueling innovation and consistent brand investments
Consumer centricity fueling innovation and consistent brand investments PERRIER-JOUET’s ‘Fill your world with ‘Must be a JAMESON’ introduces the ‘Stir Up!’ KAHLUA campaign featuring wonder’, starring Mélanie Laurent Jameson family Salma Hayek MARTELL ‘Soar beyond the expected’ 21-Year-Old ROYAL SALU
Slide 7: Investing in our future - The Chuan
Investing in our future - The Chuan 叠川 Pure malt Whisky rooted in Chinese terroir and culture Leading the development of malt whisky in China First whisky distillery in China invested in by an international spirits group Driving the trend of China pride A world class destination for local Whisky by
Slide 8: Actively strengthening our portfolio with disposal of two local brands
Actively strengthening our portfolio with disposal of two local brands in the first half FY24 disposals of Clan Campbell Reinforcing premium credentials Strengthening key geographies and Becherovka1 Number of brand acquisitions/disposals Number of brand acquisitions/disposals Super premium + North A
Slide 9: Confidently investing in the future growth of our superior aged spirits portfolio
Confidently investing in the future growth of our superior aged spirits portfolio Sustainably investing in production capacity Ireland Scotland USA Doubling capacity in Midleton behind Investing behind significant growth Expanding our distillation footprint in Jameson and turning the distillery pote
Slide 10: Growing sustainably from grain to glass
Growing sustainably from grain to glass: sharing, deploying and scaling solutions 10
Slide 11: 11
11
Slide 12: Must Win Markets
Must Win Markets USA • Consumer demand resilient as spirits market continues to normalize Weight in Net Sales 19% • Net Sales -7% with value depletions c.-6%, due to high comparison basis and compounded by inventory adjustments c. 3pts • Share gains on Jameson Original, Malibu, Kahlua, The Glenlivet
Slide 13: Must Win Markets
Must Win Markets India Weight in Net Sales 11% • Strong market demand for spirits • Acceleration in Q2 Net Sales against easing comparables Organic • Strategic International Brands in very strong growth notably Growth Pricing1 MSD Jameson, Absolut and The Glenlivet +4% • Good growth on Seagram’s whi
Slide 14: Regions
Regions Growth in Asia-RoW and Europe excluding Russia, offset by decline in Americas Europe Organic • Net Sales excluding Russia +1% with overall resilience in the region Weight in Net Sales 29% Growth Pricing1 • Strong growth2 in Central and Eastern Europe led by Poland HSD -4% • Resilience in Wes
Slide 15: House of Brands
House of Brands Jameson continuing its international expansion, Absolut in dynamic growth in Asia-RoW and Europe Strategic International Brands Organic Weight in Net Sales 64% Growth Pricing1 HSD -4% Strategic Local Brands Weight in Net Sales 17% +4% HSD Specialty Brands Weight in Net Sales 7% -5% M
Slide 16: H1 Financials
‘H1 Financials
Slide 17: Strong Gross Margin expansion thanks to pricing and tight cost control
Strong Gross Margin expansion thanks to pricing and tight cost control, sustaining organic operating margin Organic +7bps Organic PRO -3% Reported PRO -12% H1 FY23 Reported Margin Gross Margin A&P Structure costs FX/Perimeter H1 FY24 Reported Margin • Gross Margin expanding significantly as pricing
Slide 18: EPS decline due to softer Profit from Recurring Operations and higher financial expenses
EPS decline due to softer Profit from Recurring Operations and higher financial expenses Reported H1 FY23 H1 FY24 ∆ Profit from Recurring Operations 2,423 2,144 -12% Financial Expenses from Recurring Operations (134) (200) +49% Income tax on Recurring Operations (521) (475) -9% Minority interests an
Slide 19: Decline in Group Share of Net Profit driven by decrease in Profit from Recurring Operations
Decline in Group Share of Net Profit fully driven by decrease in Profit from Recurring Operations € millions H1 FY23 H1 FY24 Reported ∆ Group share in Profit from Recurring Operations 2,423 2,144 -12% Non-Recurring Operating income (expense) 86 142 Non-Recurring Financial income (expense) (5) (18) N
Slide 20: Free Cash Flow decline driven by lower profit and accelerating investments
Free Cash Flow decline driven by lower profit and accelerating as planned our investments to fuel future growth c. 80% of Recurring Free Cash Flow decrease driven by reported PRO decline and increase in CAPEX € millions H1 FY23 H1 FY24 Reported ∆ %∆ Profit from Recurring Operations 2,423 2,144 (279)
Slide 21: Deploying capital with discipline
Deploying capital with discipline Higher Net Debt/ EBITDA ratio reflecting lower year on year reported PRO and higher net debt Net Debt / 2.7x 3.3x EBITDA ratio 11 383 (9) Net Debt / EBITDA +1 199 3.3x¹ 10 273 (301) +192 +29 30 jun 2023 Free Cash M&A Share Dividends FX 31 dec 2023 Flow buyback trans
Slide 22: Medium-term financial framework and FY24 expectations
Building on a very strong FY23 and a robust performance in H1 FY24, we are confident in our medium-term financial framework of +4% to +7% top line growth, aiming for the upper end of the range, with Organic Operating leverage of +50/+60 bps. In a challenging environment, we expect for FY24: • Dynami
Slide 23: 2024 H1 Appendix
q 2024 H1 Appendix ‘
Slide 24: 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 25: Upcoming Communications
Upcoming Communications Date (subject to change) Event 20th February 2024 CAGNY 28th March 2024 US Market Webcast 25th April 2024 Q3 Sales 16th May 2024 S&R Webcast 25
Slide 26: 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 27: Strategic International Brands' organic Sales growth
Strategic International Brands’ organic Sales growth Volumes Organic Net Sales H1 FY24 growth of which Volume of which Price/mix H1 FY24 (in 9Lcs millions) Absolut 6.7 (2)% (10)% +7% Chivas Regal 2.7 (7)% (15)% +8% Ballantine's 4.7 (8)% (11)% +4% Ricard 2.4 (1)% (6)% +5% Jameson 6.0 (1)% (7)% +6% Ha
Slide 28: Sales Analysis by Period and Region
Sales Analysis by Period and Region Net Sales Q1 FY23 Q1 FY24 Change Organic growth Group Structure Forex Impact (€ millions) Americas 957 28.9% 858 28.2% (100) (10)% (88) (10)% +78 +8% (89) (9)% Asia / Rest of World 1,488 45.0% 1,329 43.7% (159) (11)% +0 +0% +45 +3% (204) (14)% Europe 863 26.1% 855
Slide 29: Summary Consolidated Income Statement
Summary Consolidated Income Statement (€ millions) H1 FY23 H1 FY24 Change Net sales 7,116 6,590 (7)% Gross Margin 4,368 4,081 (7)% Advertis i ng a nd promotions s pend (994) (980) (1)% Contribution after A&P spend 3,375 3,101 (8)% Structure cos ts (951) (958) +1% Profit from recurring operations 2,4
Slide 30: Profit from Recurring Operations by Region (1/2)
Profit from Recurring Operations by Region (1/2) World (€ millions) H1 FY23 H1 FY24 Change Organic Growth Group Structure Forex impact Net Sales 7,116 100.0% 6,590 100.0% (525) (7)% (213) (3)% +264 +4% (576) (8)% Gross margin 4,368 61.4% 4,081 61.9% (287) (7)% (46) (1)% +176 +4% (416) (10)% Advertis
Slide 31: Profit from Recurring Operations by Region (2/2)
Profit from Recurring Operations by Region (2/2) Asia / Rest of the World (€ millions) H1 FY23 H1 FY24 Change Organic Growth Group Structure Forex impact Net Sales 3,122 100.0% 2,850 100.0% (272) (9)% +16 +1% +79 +3% (366) (12)% Gross margin 1,827 58.5% 1,699 59.6% (128) (7)% +62 +3% +89 +5% (279) (
Slide 32: Foreign Exchange Impact / translation
Foreign Exchange Impact / translation PRO impacted mostly by translation impact Average rates evolution vs EUR On Profit from Forex impact H1 FY24 (€ millions) On Net Sales Recurring H1 FY23 H1 FY24 % Operations US dollar USD c 1.01 1.08 (7)% (107) (58) Chinese yuan CNY 7.08 7.83 (11)% (81) (51) Ind
Slide 33: 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 +15 Financial result (1) Pre-tax profit from recurring operations +14 Impact on the balance sheet (€ millions) Inc
Slide 34: Balance Sheet: Assets
Balance Sheet: Assets Assets 30/06/2023 31/12/2023 (€ millions) (Net book value) Non-current assets Intangi bl e a s s ets a nd goodwi l l 19,000 18,875 Ta ngi bl e a s s ets a nd other a s s ets 4,798 5,027 Deferred tax a s s ets 1,870 1,851 Total non-current assets 25,667 25,754 Current assets Inv
Slide 35: Balance Sheet: Liabilities and Shareholder's Equity
Balance Sheet: Liabilities and Shareholder’s Equity Liabilities and shareholders’ equity 30/06/2023 31/12/2023 (€ millions) Group Shareholders’ equity 15,717 16,193 Non-control l i ng i nteres ts 998 1,016 of which profit attributable to non-controlling interests 21 30 Total Shareholders’ equity 16,
Slide 36: Analysis of Working Capital Requirement
Analysis of Working Capital Requirement June December June December H1 FY23 WC H1 FY24 WC (€ millions) 2022 2022 2023 2023 change* change* Aged work i n progres s 5,732 5,873 6,267 6,513 239 278 Adva nces to s uppl i ers for wi ne a nd a gei ng 8 19 12 19 10 7 s pi ri ts Pa ya bl es on wi ne a nd a
Slide 37: Net Debt
Net Debt 30/06/2023 31/12/2023 (€ millions) Current Non-current Total Current Non-current Total Bonds 580 9,678 10,258 739 10,318 11,057 Commercial paper 801 - 801 1,160 - 1,160 Other loans and long-term debts 155 173 328 181 128 310 Other financial liabilities 956 173 1,129 1,341 128 1,470 Gross Fi
Slide 38: Change in Net Debt
Change in Net Debt (€ millions) 30/06/2023 31/12/2023 Opera ting profi t 3,265 2,285 Depreci a tion a nd a mortis a tion 417 217 Net cha nge i n i mpa i rment of goodwi l l , PPE a nd i ntangi bl e a s s ets 52 14 Net cha nge i n provi s i ons (74) (42) Cha nges i n fa i r va l ue on commerci a l de
Slide 39: Net Debt Maturity profile as at 31 December 2023
Net Debt Maturity profile as at 31 December 2023 2.0 €bn 1.5 1.2 1.0 1.7 1.6 1.5 1.4 1.1 0.5 0.8 0.8 0.8 0.5 0.5 0.5 0.0 23/24 24/25 25/26 27/28 28/29 29/30 30/31 31/32 32/33 33/34 … 41/42 … 50/51 -0.8 Cash Other debts Commercial paper Bonds Syndicated credit -0.5 -1.0 39
Slide 40: Bond Details
Bond Details Currency Par value Coupon Issue date Maturity date € 1,000 m o/w: 24/10/2019 € 500 m 0.500% 24/10/2027 € 500 m 0.875% 24/10/2031 € 650 m 2.125% 09/29/2014 09/27/2024 € 1,500 m o/w: € 750 m 1.125% 04/01/2020 04/07/2025 € 750 m 1.750% 04/08/2030 € 500 m o/w: € 250 m 1.125% 04/27/2020 04/0
Slide 41: Net debt / EBITDA evolution
Net debt / EBITDA evolution Closing rate Average rate(1) EUR/USD rate 30/06/2023 -> 31/12/2023 1.09 -> 1.11 1.05-> 1.08 Ratio at 30/06/2023 2.7 2.7 EBITDA & cash generation excl. Group structure effect and forex impacts 0.4 0.4 Group structure and forex impacts 0.2 0.2 Ratio at 31/12/2023 3.2 3.3 (1
Slide 42: Net Diluted EPS
Net Diluted EPS (x 1,000) HY FY23 HY FY24 Number of shares in issue at end of period 257,947 255,632 Weighted average number of shares in issue (pro rata temporis) 257,947 255,632 Weighted average number of treasury shares (pro rata temporis) (1,311) (2,839) Dilutive impact of stock options and perf