2010/11 Annual Results09/01/2011
Very strong performance, above initial targets / final dividend, exercice 2010/2011
Profit from recurring operations: +8%(1)
Group share of net profit: +10%
Significant reduction in net debt to € 9 billion
- Sales: € 7,643 million (+8%, organic growth +7%)
- Advertising & promotion expenditure: € 1,441 million, up 11%(1) to 18.9% of sales vs. 17.8% in 2009/10
- Profit from recurring operations: € 1,909 million (+6%, organic growth +8%)
- Group share of net profit from recurring operations: € 1,092 million (+9%)
- Group share of net profit: € 1,045 million (+10%), exceeding for the first time € 1,000 million
- Significant debt reduction, down € 1,546 million, to € 9,038 million
- Improvement in the Net Debt/EBITDA ratio(2): 4.4 at 30 June 2011 vs. 4.9 at 30 June 2010
In 2010/11, against the backdrop of a recovery in consumer spending in its markets, Pernod Ricard demonstrated the efficiency of its strategy, which notably enabled the Group to exceed its financial targets, with:
- dynamic sales, including an all-time volume record for the Top 14 and for 7 of its brands
- strong advertising and promotion support and numerous initiatives in the field of innovation
- acceleration of organic growth in profit from recurring operations of +8% (+4% growth in 2009/10, initial target of +6% for 2010/11) with growth(1) in every region of the Group
- continued debt reduction and refinancing
- organic growth of +7%, with a recovery in mature markets, which grew +1.5%(1) and the return to very strong growth in emerging markets, up +17%(1),
- a favourable foreign exchange effect of € 277 million for a +4% positive effect over the full financial year, which weakened however in the second half of the year, totalling € 325 million at the end of the first half,
- a negative group structure effect of -2%, primarily due to the disposal of certain Scandinavian, Spanish and New Zealand operations.
- Growth in all regions:
- Asia/Rest of the World, with growth of +19% (organic growth of +15%), remained the driving force for Group growth, primarily due to Asia (particularly China, India, Vietnam, Taiwan and Duty Free markets). Growth was also very strong in Africa/ME and Turkey. Sales grew +3%(1) during the financial year in Japan, with the impact of the tsunami having been less significant than anticipated (sales down -7%(1) in the 4th quarter).
- Americas reported growth of +8% (organic growth of +5%). In the US, sales increased +2%(1), which included renewed growth by Absolut and the continued success of Jameson. Sales also grew in all other markets in the region, except in Venezuela. Brazil’s sales grew +12%(1), driven by the Top 14 (+41%(1)), particularly due to the success of Absolut and Scotch whiskies.
- In Europe excluding France, the trend improved markedly, with stable(1) sales over the full financial year (compared to a decline of -5% in 2009/10). This resulted from a robust recovery in Eastern and Central Europe (+9%(1)) and a moderate decline in Western Europe (-2%(1)) which was primarily related to two markets : Greece (-33%(1)) and Spain (-5%(1)). Nonetheless, sales in Western Europe clearly improved when compared to the previous financial year (-5%(1)).
- In France, sales grew +4%(1) due to the commercial performance of the Top 14 brands, especially Ricard, Ballantine’s, Mumm, Chivas, Havana Club, Perrier-Jouët, Jameson and Absolut.
The 18 key local spirits brands continued to grow and increased overall by +3% in value(1), driven by local whisky brands in India, which reported a +30%(1) rise. The overall performance was adversely affected however by the decline of Seagram’s Gin in the US (-12%(1)) and 100 Pipers in Thailand (-13%(1)).
Premium brands(3) represented 71% of Group sales during the 2010/11 financial year, a two- percentage point increase compared to the previous year.
Gross margin and advertising and promotion expenditure
Profit from recurring operations
Over the full financial year 2010/11, the foreign exchange effect on the 2010/11 profit from recurring operations was a positive € 25 million, including a favourable effect of € 98 million in the first half and an unfavourable effect of € 73 million in the second half. The negative € 49 million group structure effect on 2010/11 profit from recurring operations was particularly related to the disposal of operations in Spain, Scandinavia and New Zealand.
Emerging countries are increasingly powerful growth drivers for the Pernod Ricard Group. Their share in the Group’s profit from recurring operations was 38% in the 2010/11 financial year, compared to 33% in 2009/10.
Net profit from recurring operations
The average cost of debt came to 4.7% over the full 2010/11 financial year, a moderate increase compared to the 4.3% noted over the previous financial year. Based on current interest rates, our 2011/12 target is to maintain the average cost of borrowing close to 5%.
Overall, the Group share of net profit from recurring operations reached € 1,092 million, an increase of +9% compared to the 2009/10 financial year; diluted net earnings per share from recurring operations also increased +9% to € 4.12 per share.
Therefore, the Group share of net profit reached € 1,045 million, a +10% increase compared to the 2009/10 financial year, and exceeded for the first time € 1,000 million.
The Net Debt to EBITDA ratio(2) (average EUR/USD rate of 1.36) decreased significantly to 4.4 at 30 June 2011, compared to 4.9 at 30 June 2010. The Group confirms its target for a Net Debt to EBITDA ratio(2) close to 4 at 30 June 2012.
Note that the Group successfully continued to refinance its debt with attractive conditions in 2010/11, with two bilateral financing packages of € 150 million and USD 201 million in December 2010 and two bond issues:
- EUR 1 billion in March 2011
- USD 1 billion (inaugural issue in the US) in April 2011
As a result, at 30 June 2011:
- bond debt represented 48% of gross debt, ahead of the plan to achieve the announced target of 50%
- the success of the inaugural issue in the US market has broadened the investor base and made future refinancing maturities more secure
- the weighted maturity of the debt was extended by 3 years and 7 months, with a more even future repayment profile
Dividend: € 1.44 per share
Conclusion and outlookIn 2010/11, Pernod Ricard successfully:
- strengthened its market positions, particularly in emerging markets, which returned to very strong growth
- continued to implement its strategy of innovation and premiumisation, thanks to substantial, targeted investment
- increased its gross margin rate
- accelerated the pace of its organic growth in profit from recurring operations to +8% (+4% in 2009/10, compared to an initial target of +6% for 2010/11)
- continued its debt reduction and increased the share of its bond financing (EUR & USD)
In line with its standard practice, Pernod Ricard will communicate its earnings targets for the current financial year as part of its communication on 1st quarter sales on 20 October 2011.
(1) Organic growth
(2) Net debt calculated by translating the non EU-denominated portion at average forex rates for the financial year
(3) Retail price > 17 USD for spirits and > 5 USD for wine
About Pernod Ricard
Pernod Ricard is the world’s n°2 in wines and spirits with consolidated Sales of € 8,682 million in 2015/16. Created in 1975 by the merger of Ricard and Pernod, the Group has undergone sustained development, based on both organic growth and acquisitions: Seagram (2001), Allied Domecq (2005) and Vin&Sprit (2008). Pernod Ricard holds one of the most prestigious brand portfolios in the sector: 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, Kahlúa and Malibu liqueurs, Mumm and Perrier- Jouët champagnes, as well Jacob’s Creek, Brancott Estate, Campo Viejo, Graffigna and Kenwood wines. Pernod Ricard employs a workforce of approximately 18,500 people and operates through a decentralised organisation, with 6 “Brand Companies” and 85 “Market Companies” established in each key market. Pernod Ricard is strongly committed to a sustainable development policy and encourages responsible consumption. Pernod Ricard’s strategy and ambition are based on 3 key values that guide its expansion: entrepreneurial spirit, mutual trust and a strong sense of ethics. Pernod Ricard is listed on Euronext (Ticker: RI; ISIN code: FR0000120693) and is part of the CAC 40 index.
Contacts Pernod Ricard
Julia MASSIES / VP, Financial Communication & Investor Relations
Tel: +33 (0)1 41 00 41 07
Adam RAMJEAN / Investor Relations Manager
Tel: +33 (0)1 41 00 42 14
Sylvie MACHENAUD / Director External Communications
Tel: +33 (0)1 41 00 42 74
Emmanuel VOUIN / Press Relations Manager
Tel: +33 (0)1 41 00 44 04
Apolline CELEYRON / Press Relations Officer
Tel: +33 (0)1 41 00 40 97