PARIS, October 17, 2024--(BUSINESS WIRE)--Regulatory News:
Pernod Ricard (Paris:RI):
Press Release – Paris, 17 October 2024
Sales for Q1 FY25 totalled €2,783m, an organic decline of -5.9% and -8.5% reported, with unfavourable Foreign Exchange impact of -€103m mainly linked to Argentinian Peso, Turkish Lira and Nigerian Naira, partly offset by positive perimeter impact of +€22m.
We experienced a slow start to the year, notably with China in sharp decline, in a context of continuing macroeconomic weakness impacting consumer sentiment, and with the US in decline, reflecting underlying sell-out performance amplified by inventory adjustments. The quarterly sales result is softer than previously expected as the weakness in China is also affecting Asia Travel Retail. In addition, in India, where the underlying growth is strong, but we faced technical sales phasing, expected to fully reverse in Q2. Finally, markets in Europe endured adverse weather conditions over the summer.
Our broad geographic base allowed us to deliver strong performances in a number of markets across all the regions, to partially mitigate those declines. Markets of note include Japan, Canada, Poland, Brazil, Turkey, Nigeria and Travel Retail in Americas and Europe.
Overall volumes are stable, with a price/mix effect of -6% in a moderated pricing environment and negative market-mix notably due to the performance in US and China.
By regions, including Must Win markets:
Americas -5%,
USA -10%,
Spirits market continues to normalize
Pernod Ricard’s sell-out value c.-5%, with Net Sales reflecting inventory adjustments
Jameson performance broadly in line with direct competitive set
Strong activation plans and protecting marketing investment on our key brands, ahead of the festive season
For the full year, we expect to see a gradual improvement in our sell-out
Canada: strong growth, in particular from newly acquired RTD brands
Mexico: decline, notably with weaker tourism impacting On-trade
Asia-RoW -8%,
India +2%,
Solid sales growth, impacted by phasing, expected to fully reverse in Q2
Strong underlying sell-out growth, with the market continuing to enjoy dynamic consumer fundamentals
Performing ahead of the industry, consolidating leadership position
Strong performance of Royal Stag, Blenders Pride, Jameson, all growing double-digits
Strong growth expected for the full year
China -26%,
Sharp sales decline in a challenging macroeconomic environment with weak consumer demand over the summer and into the Mid-Autumn Festival
Net Sales declines on Martell Cognac and Scotch, while premium brands including Jameson, Beefeater, Kahlúa and Olmeca are growing strongly
Further to the announcement by MOFCOM for the implementation of temporary duty deposits effective from Friday 11th October, actions are being taken to mitigate the impact on the group performance
Given the current weak environment, we expect to see a more significant full-year decline than last year
Gaining share and continued strong growth in Japan, while declining in Korea, as the macroeconomic environment remains weak
Strong results in Africa and Middle East, notably in Turkey with Chivas Regal and Ballantine’s
Europe -3% (ex-Russia +1%),
Robust performance in Europe excluding Russia, though Western European markets in particular were impacted by adverse summer weather
Gaining market share in France, Germany and Poland
Solid performance of Ballantine’s, Mumm and RTDs
Global Travel Retail +3%,
Strong growth in all regions except Asia, with good growth for Absolut, Jameson and Ballantine’s
Weak consumer sentiment affecting Chinese travelers’ spend, which we expect to persist for the full year
By brands:
Strategic International Brands -10%, mainly driven by Martell in China, Royal Salute in Korea and The Glenlivet in the US
Strategic Local Brands +1%, with continued good momentum of Seagram’s whiskies portfolio and Kahlúa
Specialty Brands -9%, largely driven by the US market performance, though with good results from Bumbu, Redbreast and Spot Range Irish whiskies
RTDs: strong double-digit growth led by Absolut and Ace Beverage
Outlook
Leveraging our diversified portfolio and balanced footprint, we reiterate our confidence in our medium-term financial framework of aiming for the upper end of +4% to +7% organic Net Sales growth and +50bps / +60bps organic Operating Margin expansion.
For FY25, we expect Full-year organic Net Sales back to growth with continuing volume recovery and to sustain organic Operating Margin.
All growth data specified in this press release refers to organic growth (at constant FX and Group structure), unless otherwise stated. Data may be subject to rounding.
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 financial statements in understanding the Group’s performance. These non-IFRS measures should be considered as complementary to the comparable IFRS measures and reported movements therein.
Organic growth
Organic growth is calculated after excluding the impacts of exchange rate movements, acquisitions and disposals, changes in applicable accounting principles and hyperinflation.
Exchange rates impact is calculated by translating the current year results at the prior year’s exchange rates and adding the year-on-year variance in the reported transaction impact between the current year and the previous year.
For acquisitions in the current year, the post-acquisition results are excluded from the organic movement calculations. For acquisitions in the prior year, post-acquisition results are included in the prior year but are included in the organic movement calculations of the current year only from the anniversary date of the acquisition.
The impact of hyperinflation on Profit from Recurring Operations in Turkey and Argentina is excluded from organic growth calculations by capping local unit price/cost increases to a maximum of +26% per year, equivalent to +100% over three years.
Where a business, brand, brand distribution right or agency agreement was disposed of or terminated in the prior year, the Group excludes the results for that business from the prior year in the organic movement calculations. For disposals or terminations in the current year, the Group excludes the results for that business from the prior year from the date of the disposal or termination.
This measure enables users to compare the Group’s performance on a like-for-like basis, focusing on areas that local management is most directly able to influence.
Profit from recurring operations
?Profit from recurring operations corresponds to the operating profit excluding other non-recurring operating income and expenses.
About Pernod Ricard
Pernod Ricard is a worldwide leader in the spirits and wine industry, blending traditional craftsmanship, state-of-the-art brand-building, and global distribution technologies. Our prestigious portfolio of premium to luxury brands includes Absolut vodka, Ricard pastis, Ballantine’s, Chivas Regal, Royal Salute, and The Glenlivet Scotch whiskies, Jameson Irish whiskey, Martell cognac, Havana Club rum, Beefeater gin, Malibu liqueur and Mumm and Perrier-Jou?t champagnes. Our mission is to ensure the long-term development of our brands with full respect for people and the environment, while empowering our employees around the world to be ambassadors of our purposeful, inclusive and responsible culture of authentic conviviality. Pernod Ricard’s consolidated sales amounted to €11,598 million in fiscal year FY24.
Pernod Ricard is listed on Euronext (Ticker: RI; ISIN Code:FR0000120693) and is part of the CAC 40 and Eurostoxx 50 indices.
