Pernod Ricard Sa · EURONEXT:RI
Pernod Ricard Sa — H1 FY21 Earnings Presentation
65 slides from Pernod Ricard Sa's earnings presentation, Feb 11, 2021
Slide 1: FY21 Half-Year Sales and Results
Pernod Ricard Créateutrs de Comivialité FY21 HALF-YEAR SALES ANG RESULTS Le r i wile, I) | % t ne 11 February 2021 All growth data specified in this presentation ref growth (constant FX and Group structure), unless otherwise stated. This presentation can be downloaded from our website: www.pernod-ri
Slide 2: Executive Summary
Executive Summary Sales Analysis Sustainability & Responsibility Profit from Recurring Operations Net Profit Cash Flow and Debt Conclusion and Outlook Appendix
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Slide 4: H1 FY21 confirming sustainable business strength
-3.9% Organic Sales -2.4% Organic PRO! -10.8% Reported PRO! H1 FY21 confirming sustainable business strength, with growth returning in Must-win domestic markets Delivering Transform & Accelerate strategic priorities - USA in strong growth: +5% + China confirming return to very strong growth: +13% -
Slide 5: Key Figures - Executive Summary
Key Figures _. Executive SUMMmarLy H1 FY21 H1 FY21 (€m) vs. H1 FY20 Reported Organic Sales 4,985 -8.9% -3.9% Mature markets 2,760 -8% 6% + 5 1 bps Emerging markets 2,226 -10% -1% Sales excluding Travel Retail +1% PRO Margin PRO 1,595 -10.8% -2.4% PRO / Sales 32.0% +51bps . F . x ®, 4 Net Profit from
Slide 6: Americas +2%: good growth in most domestic markets
Americas +2%: good growth in most domestic markets, with particular dynamism in USA, but significant decline in Travel Retail Asia-RoW -6%: double-digit growth in China, Turkey, Korea and Pacific, and India returning to growth in Q2, but Covid-related declines in certain Asian markets and Travel Ret
Slide 7: Continuing to deliver on value creation levers
Executive Active Portfolio Management +10% Innovation Continuing to deliver on value creation levers P Acquisition of Petroni Strong contribution of recently acquired brands to topline growth Mis to strengthen ; presence in dynamic wen aperitif segment abbit AMBLER { ple EE hun — _ Partnership with
Slide 8: Acceleration of digital transformation
Acceleration of digital transformation Strong progress on Key Digital projects in core markets a, Matrix : Marketing Investment Optimisation Unlocking our power with new technology & data rE] Leveraging internal and external data to optimise, through AI, advertising and in-store animation budgets ac
Slide 9: E-commerce acceleration
E-commerce acceleration E-commerce delivering strong value growth: H1 +63% Top 4 markets accounting for 80% of Sales in Drinks&Co: consumer platform strong value growth: On-line sales delivering consistent growth, +60% = China + 46% and increasing consumer loyalty = USA + 84% = UK+ 138% Opening of D
Slide 10: ’ Pernodiltic <
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Slide 11: Sales analysis
Sales analysis 28% § # Inggg % of Sales WHI Fy21 Results Hi Sales in decline but Q2 improving vs. Q1 Good growth in most domestic markets, with particular dynamism in USA, but significant decline in Travel Retail Double-digit growth in China, Turkey, Korea and Pacific, and return to ow in India in Q
Slide 12: Must-win markets
4 Must-win markets USA: strong growth driven by dynamic Offtrade performance Pernod Ricard growing in line with market by channel* + Very strong performance in Offtrade + Market share maintained in On-trade + E-commerce booming: +84% Brands!: + Jameson (+18%/+1%): continued strong growth in spite of
Slide 13: Launch of Secret Speyside Single Malt Collection
Launch of Secret Speyside Single Malt Collection Martell Noblige Revamp Campaign “Dare to be the Martell Gourmet Theater 2020 editions The Glenlivet Media “Original Stand Out Swift” successfully launched in December by tradition” campaign with new communication assets • • • • • •
Slide 14: Royal Stag new campaign "Make it Large!"
Royal Stag new campaign “Make it Large!” featuring leading global New limited edition packs for 100 Pipers Imperial Blue latest edition of its widely popular ‘Men Will Be icons from across fields, ethnicities, nationalities & geographies Legacy Project Men’ campaign featuring Karan Wahi • • • •
Slide 15: Jameson Tastehouse Dublin, Martell boutique Hainan
Jameson Tastehouse Dublin Martell boutique, Hainan, China • • • • •
Slide 16: Europe
Europe Continued resilience in spite of 2"¢ wave of On-trade restrictions France: -8% + New national lockdown from 30 October impacting On-trade and social gatherings + Mid-single digit Sell-out! growth in Off-trade driven by dynamism of major brands and supported by On-trade transfer; not fully ref
Slide 17: Sales analysis
Sales analysis H1 FY21 Sales & Results 11 February 2021 Good growth, enhanced by phasing, driv Dynamic innovations. articular A Modest growth 5 Market share gains’ Strong pricing acro: sruption Good growth driven primarily by Passport, e Market share gains in whis Decline driven by ongoing On-trade
Slide 18: Slide 18
Slide 19: Strategic International Brands decline due to Travel Retail and On-Trade exposure
Strategic International Brands decline due to Travel Retail and On-Trade exposure but very strong performance of Specialty Brands Strategic -10% International 64% 7 Brands me oi | Strategic Local 18% Brands ° Bx mr | an” Specialty Brands +17% +22) mr | +0% ii +3% % of Sales Solid growth of Malibu, J
Slide 20: L'Atelier Martell opened new store in Shenzhen
L’Atelier Martell opened groundbreaking new store in Martell offering all-new content online partnership with Angel Chen, well-known Chinese central Shenzhen, China, its first store outside France. famous chefs. Martell has rolled out concept in Malaysia designer, revisited Martell Noblige – New lim
Slide 21: Jameson campaigns and limited edition
Jameson Nigeria ran a #JamesonBeardDay Content & eCRM Jameson Limited Edition bottle for exclusive sale in Japan, 'Sliders TVC' is rolled out across many of Jameson's campaign, in celebration of World Beard Day, showcasing stories designed in collaboration with founder and designer of popular Europe
Slide 22: Absolut campaigns
Absolut launched a new campaign ‘It’s in Our spirit’, Absolut collaborated with Korean artist Xeva Absolut has launched the #VoteResponsibly campaign to highlighting the desire to come together and be more inclusive to create a giant eco graffiti in the heart of remind people to vote for the US elec
Slide 23: Glenlivet e-commerce, Ballantine's and Chivas Regal campaigns
The Glenlivet distillery’s exclusive single cask single malts now Ballantine’s launched a new global campaign 'Stay True: Chivas Regal Success is a Blend campaign delivered at home, with the opening of its e-commerce platform. There's No Wrong Way’, encouraging us to live our own way. activated with
Slide 24: Other key brands
Other key brands H1 FY21 Sales & Results 11 February 2021 Beefeater: -20%, with dynamic Flavours, double-digit development in USA, Czech Republic and China, but significant exposure to On-trade in Spain image: Beefeater campaign The Spirit of London Havana Club: -9%, with weakness in Western Europe,
Slide 25: Specialty Brands in very strong growth
Specialty Brands in very strong growth Continued strong development of Specialty Whiskey portfolio, with Aberlour growing +38% in USA and +9% in France. Redbreast also in strong double-digit growth in USA and Ireland Monkey 47 impacted by On-trade disruptions in Western Europe, but continued strong
Slide 26: Sustainability & Responsibility
“SUSTAINABILITY — & RESPONSIBILITY
Slide 27: Nurturing TERROIR
Nurturing TERROIR Sustainable Agriculture through strong partnerships Irish Distillers SUSTAINABL! SPRING BARLEY Ls Pernod Ricard Sustainable Green Spring Barley scheme: v Supporting sustainable barley sector vy Enhancing biodiversity on farms Y Helping farmers reduce carbon footprint 220 farmers pa
Slide 28: Valuing PEOPLE
Valuing PEOPLE Supporting communities H1 FY21 Sales & Results 11 February 2021 Black Lives Matter + Support pledged by PR USA to Equal Justice Initiative, The National Urban League, and National Black Chamber of Commerce + Incremental contributions from Malibu and Martell #EngageResponsibly - First
Slide 29: Circular MAKING
Circular MAKING Strong progress towards sustainable packaging targets Set to achieve target of no single-use plastic POS after June 2021 New Sustainable Packaging Panel & dedicated ‘EcoPack’ Tool to ensure global alignment + 100% recyclable Beefeater bottle, 400+ tonnes of plastic saved per year (th
Slide 30: Responsible HOSTING
Responsible HOSTING Tackling alcohol misuse Tsp Coe + Mandatory MOOC for all employees Respansibls Drinking) + Global Responsible Drinking Charter + Partnership with UNITAR on drivers education programmes + South Africa & Dominican Republic starting countries + E-commerce partnership with online ret
Slide 31: Pas oe
Pas oe * Pernod Ricard Pee. 31 —eEO7 COCO Créat. er de comivialité
Slide 32: Group Income statement
Group Income statement PRO organic margin improvement +51bps despite Sales decline, thanks to dynamic management of resources and favourable phasing € millions H1FY20 HiFy2i Reported Organic Sales! 5,474 4,985 -8.9% -3.9% Gross margin after logistics costs (GM) 3,419 3,021 -12% 5% GM / Sales 62.5% 6
Slide 33: Americas
Americas PRO margin improvement reflecting tight resource management, enhanced by phasing € millions HIF¥Y20 HiFy21 Reported Organic Sales 1,461 1,402 -4% +2% Gross margin after logistics costs (GM) 986 909 -8% Stable GM / Sales 67.5% 64.8% -80bps Advertising & prom. expenditure (A&P) (285) (250) -1
Slide 34: Asia - Rest of World
Asia - Rest of World PRO margin decline resulting mainly from Gross margin pressure and FX € millions HIFY20 HiFy2i Reported Organic Sales! 2,415 2,127 -12% ~6% Gross margin after logistics costs (GM) 1,442 1,232 -15% -8% GM / Sales 59.7% 57.9% -140bps Advertising & prom. expenditure (A&P) (341) (29
Slide 35: Europe
Europe € millions HIF¥Y20 HiFy21 Reported Organic Sales 1,598 1,456 8.9% -5% Gross margin after logistics costs (GM) 991 881 -11% -T% Advertising & prom. expenditure (A&P) (216) (164) -24% -23% Contribution after A&P expenditure (CAAP) 775 717 -7% -3% Structure! (306) (255) -17% -16% Profit from Rec
Slide 36: Pare, ST
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Slide 37: Net Profit from Recurring Operations & EPS
& Results EPS reflecting decline in PRO and positive impact of FY20 Share buy-back € millions Hi FY20 Hi FY21 reported Profit from Recurring Operations 1,788 1,595 -10.8% Financial income (expense) from (164) (sy) recurring operations Income tax on recurring operations (392) (337) Minority interests
Slide 38: Non-recurring items
Non-recurring items H1 FY21 Sales & Results 11 February 2021 € millions H1 FY20 H1 FY21 Capital gains/losses and impairment (10) (6) Restructuring and reorganisation costs (115) (54) Other non-recurring income and expenses (27) (2) Non-recurring operating income and (152) (61) expenses Non-recurring
Slide 39: Group share of Net profit
Group share of Net profit € millions H1 FY20 Hi FY21 reported Profit from Recurring Operations 1,788 1,595 -10.8% Non-recurring operating income and expenses (152) (61) Operating profit 1,636 1,534 6% Financial income (expense) (166) (254) Corporate income tax (423) (294) Non-controlling interests a
Slide 40: Cash Flow & Debt
Slide 41: Cash Flow statement
Cash Flow statement € millions H1FY20 -HiF¥21 ——“**Ported if Profit from Recurring Operations 1,788 1,595 (193) -10.8% Amortisation, depreciation, provision movements and other th) ie oD Self-financing capacity from recurring “ operations 1,962 1,786 (176) 9% Decrease/(increase) in strategic stocks
Slide 42: Very strong cash delivery in H1
Very strong cash delivery in H1 Recurring Free Cash Flow at €995m, resulting from: + Decline in Profit from Recurring Operations: -10.8% + Significant improvement in operating WCR due to inventory normalisation and payables rebuilding vs. June, leading to very strong cash conversion! at 79% + Lower
Slide 43: Leverage Net Debt / EBITDA
Leverage Net Debt / EBITDA 3.2x 3.4x -€443M € millions 30 June 2020 FCF M&A and Dividends Others (mainly Translation 31 Dec 2020 other financial lease adjustment operations liabilities) • • • • • •
Slide 44: Pernod Ricard
Pernod Ricard Créaleurs de conmivialhité
Slide 45: Conclusion and Outlook
&% uy O ay Te. O ¢) 6 H1 FY21 Sales - 11 Feb H1 FY21 reflecting sustainable business strength, with growth returning in Must-win domestic markets, and agility in effectively managing crisis For FY21, Pernod Ricard expects: + Continued uncertainty and volatility, in particular relating to sanitary an
Slide 46: Questions
\\ Ws SSS WR i @Qows H1 FY21 Sales & Results 11Fel
Slide 47: Appendices: Definitions and reconciliation of non-IFRS measures
Appendices Definitions and reconciliation of non-IFRS measures to IFRS measures Pernod Ricard’s management ' progess is based on the Joan non-! measures which are chosen for planning and S ort e The Group’s management believes these measures provide valugble additional information, for users of the
Slide 48: Upcoming communications
Upcoming communications Date? Event 9 March 2021, 3pm CET 22 April 2021, 9am CET 25 May 2021, 3pm CET 22 June 2021 North America conference call Q3 FY21 Sales conference call Sustainability & Responsibility conference call Asia conference call 1. Dates are indicative and liable to change H1 FY21 Sal
Slide 49: Regional market groupings
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 Croatia Ethiopia Philippines Cuba Ge
Slide 50: Volumes
Volumes H1 FY21 Organic Sales growth Volumes Price/mix H1 FY21 (in 9Lcs millions) Absolut 5.6 -12% -11% -1% Chivas Regal 2.1 -16% -20% 4% Ballantine's 4.2 -12% -5% -7% Ricard 2.3 -5% -4% -1% Jameson 4.7 3% 2% 1% Havana Club 2.4 -9% -2% -6% Malibu 2.5 26% 26% 0% Beefeater 1.6 -20% -20% 0% Martell 1.5
Slide 51: Net Sales by region
Net Sales H1 FY20 H1 FY21 Change Organic Growth Group Structure Forex impact (€ millions) Americas 1,461 26.7% 1,402 28.1% (59) -4% 22 2% 47 3% (128) -9% Asia / Rest of World 2,415 44.1% 2,127 42.7% (288) -12% (148) -6% 1 0% (140) -6% Europe 1,598 29.2% 1,456 29.2% (142) -9% (83) -5% (8) 0% (52) -3%
Slide 52: Income statement H1 FY20 vs H1 FY21
(€ millions) H1 FY20 H1 FY21 Change Net sales 5,474 4,985 -9% Gross Margin after logistics costs 3,419 3,021 -12% Advertising and promotion expenses (842) (706) -16% Contribution after A&P expenditure 2,577 2,315 -10% Structure costs (789) (721) -9% Profit from recurring operations 1,788 1,595 -11%
Slide 53: Segment Reporting
Segment Reporting World (€ millions) H1 FY20 H1 FY21 Change Organic Growth Group Structure Forex impact Net sales (Excl. T&D) 5,474 100.0% 4,985 100.0% (489) -9% (209) -3.9% 40 1% (320) -6% Gross margin after logistics costs 3,419 62.5% 3,021 60.6% (398) -12% (188) -5.5% 17 0% (227) -7% Advertising
Slide 54: Segment Reporting: Asia and Europe
Asia / Rest of the World (€ millions) H1 FY20 H1 FY21 Change Organic Growth Group Structure Forex impact Net sales (Excl. T&D) 2,415 100.0% 2,127 100.0% (288) -12% (148) -6% 1 0% (140) -6% Gross margin after logistics costs 1,442 59.7% 1,232 57.9% (211) -15% (120) -8% (3) 0% (87) -6% Advertising & p
Slide 55: Average rates evolution and Forex impact
Average rates evolution On Profit from Forex impact H1 FY21 On Net Sales Recurring (€ millions) H1 FY20 H1 FY21 % Operations US dollar USD 1.11 1.18 6.5% (79) (40) Russian rouble RUB 71.19 88.61 24.5% (33) (24) Turkish Lira TRL 6.36 8.94 40.5% (20) (20) Indian rupee INR 78.59 87.48 11.3% (59) (18) C
Slide 56: Estimated impact of a 1% appreciation of the USD
Estimated impact of a 1% appreciation of the USD Impact on the income statement (1) (€ millions) Profit from recurring operations +10 Financial expenses (2) Pre-tax profit from recurring operations +9 Impact on the balance sheet (€ millions) Increase/(decrease) in net debt +38 (1) Full-year effect
Slide 57: Assets
Assets 30/06/2020 31/12/2020 (€ millions) (Net book value) Non-current assets Intangible assets and goodwill 16,576 15,953 Tangible assets and other assets 3,699 3,867 Deferred tax assets 1,678 1,578 Total non-current assets 21,953 21,398 Current assets Inventories 6,167 6,139 aged work-in-progress
Slide 58: Liabilities and shareholders' equity
Liabilities and shareholders’ equity 30/06/2020 31/12/2020 (€ millions) Group Shareholders’ equity 13,968 14,435 Non-controlling interests 243 244 of which profit attributable to non-controlling interests 21 18 Total Shareholders’ equity 14,211 14,679 Non-current provisions and deferred tax liabilit
Slide 59: Working capital
June December June December H1 FY20 WC H1 FY21 WC (€ millions) 2019 2019 2020 2020 change* change* Aged work in progress 4,788 5,047 5,084 5,135 123 67 Advances to suppliers for wine and ageing spirits 12 13 19 10 1 (8) Payables on wine and ageing spirits (105) (182) (108) (161) (77) (47) Net aged w
Slide 60: Net financial debt
30/06/2020 31/12/2020 (€ millions) Current Non-current Total Current Non-current Total Bonds 723 8,599 9,322 237 8,680 8,917 Syndicated loan - - - - - - Commercial paper 299 - 299 232 - 232 Other loans and long-term debts 81 192 273 275 82 357 Other financial liabilities 380 192 572 507 82 589 Gross
Slide 61: Cash flow and change in net debt
(€ millions) 31/12/2019 31/12/2020 Operating profit 1,636 1,534 Depreciation and amortisation 174 179 Net change in impairment of goodwill, PPE and intangible assets 8 6 Net change in provisions 75 (31) Changes in fair value on commercial derivatives, biological assets and investments (3) (5) Net (g
Slide 62: Debt maturity schedule
2.0 1.5 1.0 1.7 0.3 1.1 0.5 1.0 1.0 1.0 0.7 0.7 0.7 0.2 0.5 0.4 0.2 0.0 0.0 - 0.0 - 0.0 - 0.0 - 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 30/31 31/32 … 41/42 … 50/51 -0.5 Cash Other debts Commercial paper Bonds Syndicated credit -1.0 -2.0
Slide 63: Bonds outstanding
Currency Par value Coupon Issue date Maturity date € 500 m 1.875% 28/09/2015 28/09/2023 € 1,500 m o/w: € 500 m 0.000% 24/10/2023 € 500 m 0.500% 24/10/2019 24/10/2027 € 500 m 0.875% 24/10/2031 € 650 m 2.125% 29/09/2014 27/09/2024 EUR € 1,500 m o/w: € 750 m 1.125% 01/04/2020 07/04/2025 € 750 m 1.750%
Slide 64: Leverage ratio evolution
Closing rate Average rate(1) EUR/USD rate Jun FY20 -> Dec FY21 1.12 -> 1.23 1.11 -> 1.14 Ratio at 30/06/2020 3.2 3.2 EBITDA & cash generation excl. Group (2) 0.0 0.0 structure effect and forex impacts (2) Group structure and forex impacts 0.1 0.2 Ratio at 31/12/2020 3.3 3.4 (3) (1) Last-twelve-month
Slide 65: Number of shares and diluted EPS
(x 1,000) H1 FY20 H1 FY21 Number of shares in issue at end of period 265,422 261,877 Weighted average number of shares in issue (pro rata temporis) 265,422 262,315 Weighted average number of treasury shares (pro rata temporis) (1,462) (1,654) Dilutive impact of stock options and performance shares 1