Pernod Ricard Sa · EURONEXT:RI
Pernod Ricard Sa — FY2023 Earnings Presentation
61 slides from Pernod Ricard Sa's earnings presentation, Aug 31, 2023
Slide 1: FY23 Sales and Results
FY23 Sales and Results 31st August 2023 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: A Very Strong FY23
FY23 Sales and Results 2 A Very Strong FY23
Slide 3: Very strong FY23 performance in a normalising environment
Very strong FY23 performance in a normalising environment A very strong and diversified performance FY23 Sales and Results Leading premium portfolio delivering broad-based growth across regions & categories Sustaining Gross Margin and expanding Operating Margin Investing in our brands’ sustainable g
Slide 4: Excellent full year financial delivery
Excellent full year financial delivery Organic Operating Margin expansion +32bps FY23 Sales and Results Sales Reported +13% Group Share of Net Profit +13% €12,137m Organic +10% €2,262m PRO Reported +11% EPS +11% €3,348m Organic +11% €9.11 Free Cash Flow Net Debt / EBITDA -21% +0.3x €1,431m 2.7x 4
Slide 5: Broad-based growth across all regions, with strong pricing execution
Broad-based growth across all regions, with strong pricing execution and resilient volumes Gaining market share in most markets FY23 Sales and Results Organic Net Sales growth Europe Asia-Row +10% Americas OSG1 OSG1 OSG1 +2% +8% +17% Volume +1% Pricing Pricing Pricing +9% +9% +8% Pricing Weight Weig
Slide 6: Strong, diversified growth across spirits categories
Strong, diversified growth across spirits categories 6 categories driving c. 85% of the growth Premium+ brands driving c. 80% of the growth with Prestige growing at +15% FY23 Sales and Results Scotch Whisky Organic Vodka Organic 22% / 34%1 Growth Pricing² 8% / 8%¹ Growth Pricing² LDD HSD +17% +11% I
Slide 7: Consumer centricity fuelling innovation and driving consistent brand investments
Consumer centricity fuelling innovation and driving consistent brand investments FY23 Sales analysis Group A&P ratio consistent at c.16% of Net Sales Martell Noblige announces Eddie Peng Raising the bar at home with Altos RTS Absolut and Ocean Spray upcoming as its new spokesperson Margarita Classic
Slide 8: Most active year of portfolio management in a decade
Most active year of portfolio management in a decade Over €1bn invested to complement our portfolio in attractive categories in North America and continued focus on priority, premium+ brands FY23 Sales and Results Sovereign Brands Código 1530 Tequila Skrewball ACE Beverages Super premium brands Ultr
Slide 9: Demonstrated ability to rapidly scale acquired brands
Demonstrated ability to rapidly scale acquired brands Malfy’s very strong profitable growth illustrates how efficiently we integrate new brands into our ecosystem FY23 Sales and Results K 9L cases Numbers of key markets above 10K 9L Spreading La Dolce Vita with the Malfy Famiglia 2020 2023 X3 c. 400
Slide 10: Sustainability & Responsibility amplifying performance and strengthening business resilience
Sustainability & Responsibility amplifying performance and strengthening business resilience FY23 Sales and Results Seven regenerative viticulture initiatives underway 88% 8¹ 82% direct affiliates with strategic regenerative agriculture or biodiversity 82% 100% Nurturing Terroir project 36% women in
Slide 11: Delivering sustainable and stretched profitable growth
FY23 Sales and Results Delivering sustainable and stretched profitable growth 11
Slide 12: Our performance builds on our strengths and our growth model
Our performance builds on our strengths and our growth model, enhanced by tech and data Increasing our market capabilities from activating 6-8 brands to 15-20 brands FY23 Sales and Results PROMOTIONAL PORFOLIO EFFECTIVENESS EFFECTIVENESS SALES TEAMS’ TEAMS’ MARKETING MARKETING EFFECTIVENESS EFFECTIV
Slide 13: Ongoing transformation momentum
Ongoing transformation momentum Driving precision at scale and improving return on investments FY23 Sales and Results China Germany USA India A granular understanding Reducing # of touchpoints Optimising promotion Expanding penetration of of consumer demand, to while increasing spend in calendar to
Slide 14: Delivering a strong track record of performance
Delivering a strong track record of performance FY23 Sales and Results 14
Slide 15: Creating sustainable long-term value for all our stakeholders
Creating sustainable long-term value for all our stakeholders Superior S&R and Employee recognition FY23 Sales and Results Total Shareholder Return1 +18% 1 YEAR TSR +52% 3 YEAR TSR +56% 5 YEAR TSR Pernod Ricard Comparison Group 1. As at 30/06/2023, TSR spot method, with dividend reinvested. Comparis
Slide 16: Evolving our operating model to fuel our future growth
Evolving our operating model to fuel our future growth A new Executive Committee leading Agile Operating model empowering our ambition teams FY23 Sales and Results 1. Management Entities: North America, LATAM, Northern Europe, Southern Europe, Africa & Middle East, India, China, APAC, Eastern Europe
Slide 17: Driving long-term sustainable value creation
Driving long-term sustainable value creation FY23 to FY25 mid-term financial framework1 FY23 Sales and Results o +4% to +7% annual 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)
Slide 18: 2023 Sales
FY23 Sales and Results 18 2023 Sales
Slide 19: USA 0%
USA¹ 0% Stable Sales within a normalizing market FY23 Sales analysis and with underlying Spirits value depletions at c.+2% with consumer resilience • Good depletions value growth on Jameson, Kahlua, Malibu, Redbreast, Jeffersons, Altos and Del Maguey, with modest decline on Absolut • Very strong pri
Slide 20: China +6%
China¹ +6% FY23 Sales analysis Strong performance in FY23 in a very contrasted year • Year started with a very good Mid Autumn Festival performance • Environment became more challenging with soft Chinese New Year season, followed by a strong rebound in Q4 with resumption of consumer activity, amplif
Slide 21: India +13%
India¹ +13% FY23 Sales analysis Excellent growth with continued premiumization momentum • Growth led by both Price and Mix • Strategic International Brands continuing to enjoy very strong momentum, notably on Scotch portfolio, Jameson and Absolut • Strategic Local Brands continue to premiumise with
Slide 22: Global Travel Retail +40%
Global Travel Retail +40% Strong recovery as passenger traffic resumes in FY23 Sales analysis Asia • Passenger numbers at c. 90% of pre-covid levels • Double Digit price effect and favourable mix as result of progressive resumption of travel in Asia • Strong performance notably on Scotch, Martell an
Slide 23: Europe +8%
Europe¹ +8% Resilient volumes across the region, FY23 Sales analysis with a high-single-digit price effect • Spain: double-digit sales growth with On-trade recovery completed and with performance notably driven by gin portfolio, Ballantine’s and Absolut • Germany: +8% with good growth across channel
Slide 24: Americas +2% and Asia-RoW +17%
Americas¹ +2% • Canada: +3% good overall sales result, notably on Absolut, Jameson, TGL and Specialty Brands and a very dynamic RTD performance. Share gains FY23 Sales analysis • Brazil: +1% growth, with a slow down in H2 • Mexico: +12% growth driven by Absolut and Chivas Regal Asia-RoW¹ +17% • Japa
Slide 25: Strong brand momentum driving spirits' very dynamic growth
Strong brand momentum driving spirits’ very dynamic growth Strategic FY23 Sales analysis International Brands Organic Growth Pricing2 63% / 70%1 LDD +11% Strategic Local Brands 18% / 18% +10% HSD Specialty Brands 6% / 5% +8% MSD Strategic Wines 4% / -1% -2% MSD 1. Weight in FY23 Net Sales / Net Sale
Slide 26: Jameson +10%
Jameson +10% Strong growth across Europe and Asia FY23 Sales analysis • Volume continues to grow in FY23, further building on last year’s 10M cases milestone • Very strong pricing • US enjoyed mid-single digit depletions value growth with very strong double-digit growth on Jameson Orange • Continuin
Slide 27: Scotch +17%
Scotch +17% Double digit pricing building on the strong global demand for Scotch FY23 Sales analysis Chivas Regal +25% • Breaking the 5M cases milestone and the leading contributor to group growth in FY23 with notable performance in India, Turkey, Japan, Travel Retail and Spain • Exceptional growth
Slide 28: Absolut +10%
Absolut +10% FY23 Sales analysis Continued strong broad-based net sales growth despite high comparison basis with all key markets growing • Volume continues to grow in FY23, further building on last year’s 12M cases milestone • Strong pricing • Western Europe in double-digit growth led by Spain, UK,
Slide 29: Martell +10%
Martell +10% Strong sales performance in Asia and GTR FY23 Sales analysis • Very strong price effect in line with value strategy • Favourable mix, offsetting slight volume decline • Strong Mid Autumn Festival and rebound in China since March, with new price increase in May, and healthy year- end tra
Slide 30: Dynamic performance on other Strategic International Brands
Dynamic performance on other Strategic International Brands FY23 Sales analysis Beefeater ǀ +10%¹ with very dynamic Ricard ǀ +1% Prestige portfolio ǀ +15% US performance Havana Club ǀ +6% with growth Malibu ǀ +4% with H2 rebound in the US and GH Mumm & Perrier-Jouët ǀ +1% with driven by LATAM strong
Slide 31: Profit
FY23 Sales and Results 31 Profit
Slide 32: Sustaining Gross Margin and expanding Organic Operating Margin
Sustaining Gross Margin and expanding Organic Operating Margin thanks to leading premium portfolio, excellent RGM and operational efficiencies FY23 Profit Organic +32bps Organic PRO +11% Reported PRO +11% FY22 Reported Margin Gross Margin A&P Structure costs FY23 Organic Margin FX/Scope FY23 Reporte
Slide 33: Strong EPS growth at +11%
Strong EPS growth at +11% FY23 Profit Reported FY22 FY23 ∆ Profit from Recurring Operations 3,024 3,348 +11% Financial Expenses from Recurring Operations (215) (291) +36% Income tax on Recurring Operations (651) (691) +6% Minority interests and other (34) (25) Group share of Net Profit from Recurrin
Slide 34: Increase in Group Share of Net Profit +13%
Increase in Group Share of Net Profit +13% FY23 Profit Reported € millions FY22 FY23 ∆ Total Total Group share in Profit from Recurring Operations 2,124 2,340 +10% Non-Recurring Operating income (expense) (62) (83) Non-Recurring Financial income (expense) (45) (35) Non-Recurring Corporate income tax
Slide 35: Cash Flow & Debt
FY23 Sales and Results 35 Cash Flow & Debt
Slide 36: Leveraging strong cash generation to accelerate investments in future organic growth
Leveraging strong cash generation to accelerate investments in future organic growth € millions FY22 FY23 Reported ∆ %∆ FY23 Cash Flow and Debt Profit from Recurring Operations 3,024 3,348 324 +11% Amortisation, depreciation, provision movements and other 441 406 (34) Self-financing capacity from re
Slide 37: Increasing investments in Capex and strategic inventories
Increasing investments in Capex and strategic inventories to support future growth of very dynamic aged spirits’ category Elevated investments expected for the next two years FY23 Cash Flow and Debt Sustainably investing in production capacity to support future growth Ireland Scotland USA Sustainabl
Slide 38: Strong balance sheet supporting a dynamic financial policy
Strong balance sheet supporting a dynamic financial policy FY23 Cash Flow and Debt Net Debt / 2.4x 2.7x EBITDA ratio 10 273 (53) +1 072 +952 (1 431) +1 076 8 657 30 jun 2022 Free Cash M&A Share Dividends FX 30 jun 2023 Flow buyback translation and others • Significant M&A activity, notably Sovereign
Slide 39: Accelerating returns to shareholders
Accelerating returns to shareholders Proposed dividend¹ of €4.70 per share, +14% vs FY22 FY24 Share buyback program of €500m to €800m FY23 Cash Flow and Debt While maintaining investment grade rating • Investing in future organic growth, in particular through Strategic Inventories and Capital Expend
Slide 40: Outlook
FY23 Sales and Results 40 Outlook
Slide 41: Outlook to FY24
Building on our very strong FY23 performance, we confidently reiterate our FY23 to FY25 mid-term financial framework of aiming for the upper end of +4% to +7% Net Sales growth and +50/+60bps operating margin Outlook to FY24 In a challenging environment, we anticipate for FY24: • Broad-based and dive
Slide 42: Appendices
FY23 Sales and Results 42 Appendices
Slide 43: 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 44: Upcoming Communications
Upcoming Communications FY23 Appendices Date (subject to change) Event 19 October 2023 Q1 FY24 Sales* 10 November 2023 Annual General Meeting 15 February 2024 H1 FY24 Sales and Results 44
Slide 45: Emerging Markets
Emerging Markets FY23 Appendices Asia-Rest of World Americas Europe Algeria Malaysia Argentina Albania Angola Mongolia Bolivia Armenia Cambodia Morocco Brazil Azerbaijan Cameroon Mozambique Caribbean Belarus China Namibia Chile Bosnia Congo Nigeria Colombia Bulgaria Egypt Persian Gulf Costa Rica Cro
Slide 46: Strategic International Brands' organic Sales growth
Strategic International Brands’ organic Sales growth FY23 Appendices Volumes FY23 Organic Net Sales Volumes Price/mix growth FY23 (in 9Lcs millions) Absolut 12.7 +10% +2% +8% Chivas Regal 5.1 +25% +10% +15% Ballantine's 8.8 +13% (4)% +17% Ricard 4.4 +1% (1)% +2% Jameson 10.7 +10% +2% +8% Havana Club
Slide 47: Sales Analysis by Period and Region
Sales Analysis by Period and Region Net Sales FY23 Appendices FY22 FY23 Change Organic Growth Group Structure Forex Impact (€ millions) Americas 3,133 29.3% 3,481 28.7% +348 +11% +62 +2% +108 +3% +178 +6% Asia / Rest of World 4,438 41.5% 5,191 42.8% +753 +17% +755 +17% +84 +2% (86) (2)% Europe 3,130
Slide 48: Summary Consolidated Income Statement
Summary Consolidated Income Statement FY23 Appendices (€ millions) FY22 FY23 Change Net sales 10,701 12,137 +13% Gross Margin 6,473 7,246 +12% Advertising and promotions spend (1,698) (1,939) +14% Contribution after A&P spend 4,775 5,307 +11% Structure costs (1,751) (1,959) +12% Profit from Recurrin
Slide 49: Profit from Recurring Operations by Region (1/2)
Profit from Recurring Operations by Region (1/2) World FY23 Appendices (€ millions) FY22 FY23 Change Organic Growth Group Structure Forex impact Net sales (Excl. T&D) 10,701 100.0% 12,137 100.0% 1,436 +13% 1,068 +10% 248 +2% 120 +1% Gross margin after logistics costs 6,473 60.5% 7,246 59.7% 773 +12%
Slide 50: Profit from Recurring Operations by Region (2/2)
Profit from Recurring Operations by Region (2/2) Asia / Rest of the World FY23 Appendices (€ millions) FY22 FY23 Change Organic Growth Group Structure Forex impact Net sales (Excl. T&D) 4,438 100.0% 5,191 100.0% 753 +17% 755 +17% 84 +2% (86) (2)% Gross margin after logistics costs 2,496 56.2% 2,969
Slide 51: Foreign Exchange Impact
Foreign Exchange Impact FY23 Appendices Average rates evolution On Profit from Forex impact FY23 On Net Sales Recurring (€ millions) FY22 FY23 % Operations US dollar USD 1.13 1.05 7.7% 221 118 Turkish Lira TRY 13.83 20.04 -31.0% (84) (73) Indian rupee INR 84.93 85.49 -0.7% (9) (3) Chinese yuan CNY 7
Slide 52: Sensitivity of profit and debt to EUR/USD exchange rate
Sensitivity of profit and debt to EUR/USD exchange rate FY23 Appendices 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 (
Slide 53: Balance Sheet: Assets
Balance Sheet: Assets Assets FY23 Appendices 30/06/2022 30/06/2023 (€ millions) (Net book value) Non-current assets Intangible assets and goodwill 17,657 19,000 Tangible assets and other assets 4,600 4,798 Deferred tax assets 1,844 1,870 Total non-current assets 24,100 25,667 Current assets Inventor
Slide 54: Balance Sheet: Liabilities and Shareholder's Equity
Balance Sheet: Liabilities and Shareholder’s Equity Liabilities and shareholders’ equity FY23 Appendices 30/06/2022 30/06/2023 (€ millions) Group Shareholders’ equity 15,944 15,717 Non-controlling interests 309 998 of which profit attributable to non-controlling interests 35 21 Total Shareholders’ e
Slide 55: Analysis of Working Capital Requirement
Analysis of Working Capital Requirement FY23 Appendices June June June FY22 WC FY23 WC (€ millions) 2021 2022 2023 change* change* Aged work in progress 5,373 5,732 6,267 287 (555) Advances to suppliers for wine and ageing spirits 9 8 12 (1) (2) Payables on wine and ageing spirits (93) (115) (182) (
Slide 56: Net Debt
Net Debt 30/06/2022 30/06/2023 FY23 Appendices (€ millions) Current Non-current Total Current Non-current Total Bonds 842 9,238 10,079 580 9,678 10,258 Commercial paper 180 - 180 801 - 801 Other loans and long-term debts 226 179 405 155 173 328 Other financial liabilities 406 179 585 956 173 1 129 G
Slide 57: Change in Net Debt
Change in Net Debt FY23 Appendices (€ millions) 30/06/2022 30/06/2023 Operating profit 2,963 3,265 Depreciation and amortisation 381 417 Net change in impairment of goodwill, PPE and intangible assets 10 52 Net change in provisions 7 (74) Changes in fair value on commercial derivatives and biologica
Slide 58: Net Debt Maturity profile as at June 2023
Net Debt Maturity profile as at 30 June 2023 FY23 Appendices 58
Slide 59: Bond Details
Bond Details Currency Par value Coupon Issue date Maturity date FY23 Appendices € 1,500 m o/w: € 500 m 0.000% 24/10/2019 24/10/2023 € 500 m 0.500% 24/10/2027 € 500 m 0.875% 24/10/2031 € 650 m 2.125% 29/09/2014 27/09/2024 € 1,500 m o/w: € 750 m 1.125% 01/04/2020 07/04/2025 € 750 m 1.750% 08/04/2030 E
Slide 60: Net debt / EBITDA evolution
Net debt / EBITDA evolution FY23 Appendices Closing rate Average rate(1) EUR/USD rate Jun FY22 -> Jun FY23 1.04 -> 1.09 1.13 -> 1.05 Ratio at 30/06/2022 2.5 2.4 EBITDA & cash generation excl. Group structure effect and forex impacts (0.1) (0.1) Group structure and forex impacts 0.3 0.4 Ratio at 30/0
Slide 61: Net Diluted EPS
Net Diluted EPS FY23 Appendices (x 1,000) FY22 FY23 Number of shares in issue at end of period 257,947 255,632 Weighted average number of shares in issue (pro rata temporis) 261,190 257,537 Weighted average number of treasury shares (pro rata temporis) (2,158) (1,488) Dilutive impact of stock option