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Pernod Ricard endeavours to regularly and timely provide all present and future Group shareholders and investors with such relevant information needed to ascertain an understanding of the Group's performance.

2010/11 Annual Results


Very strong performance, above initial targets / final dividend, exercice 2010/2011

Press Release


Sales: +7%(1)
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
The Pernod Ricard Board of Directors’ meeting of 31 August 2011, chaired by Patrick Ricard, approved the financial statements for the 2010/11 financial year ended 30 June 2011.

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



Full-year sales totalled € 7,643 million (excl. tax and duties), a sustained growth of +8%, resulting from:
  • 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.
Consolidated sales for the 4th quarter 2010/11 declined by a moderate -1% to € 1,741 million, resulting from +6% organic growth, a negative 5% foreign exchange effect and a negative 2% Group structure effect.
This 4th quarter was in line with the trend noted over the first nine months of the financial year, with sustained growth of the Top 14 (+8%(1)), very strong development in emerging markets (+20%(1)) and stable(1) sales in mature markets.


Régions :

  • 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 Top 14 (58% of group sales) grew +6% in volume and reached an all-time record high during the financial year, as did seven of its brands: Absolut, Chivas, Jameson, Havana Club, Martell, Royal Salute and The Glenlivet. The Top 14 brands grew +10% in value(1), and five of them reported double-digit growth(1): Royal Salute (+27%), Martell (+22%), Jameson (+20%), Perrier Jouët (+17%) and The Glenlivet (+14%). Only Kahlua slipped back modestly -1%(1) (launch of the new “Delicioso” advertising campaign during the financial year).

The priority premium wine brands grew +0.4%(1), with the confirmed growth of Campo Viejo and Graffigna offsetting the moderate decline of Jacob’s Creek and Brancott Estate. The “value” strategy implemented for these brands generated a +6%(1) increase in their contribution after advertising and promotion during the financial year.

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

Gross margin (after logistics costs) was € 4,610 million, an increase of +8%(1), with a gross margin to sales ratio which substantially improved to 60.3% in 2010/11, compared to 59.6% in the previous year (+75 bps). This was the result of a favourable mix effect relating to the percentage rise in total sales of the Top 14 brands and superior qualities particularly on Martell, Ballantine’s and Chivas, price increases (+1.5% on average for the Top 14) and good control of COGS (+1.5% on average).
Advertising and promotion expenditure increased +11%(1) to € 1,441 million. As announced, Pernod Ricard significantly increased expenditure to support its brands with an advertising and promotion expenditure to sales ratio of 18.9%. 76% of investment focused on the Top 14, which benefited from a 24.7% advertising and promotion expenditure to sales ratio in 2010/11, compared to 24.3% in the previous year. Expenditure priority was given to emerging markets, which attracted 54% of total expenditure growth.


Structure costs

Structure costs increased +5%(1) to € 1,260 million, growing more slowly than sales. This resulted from the allocation of resources based on potential for market growth. The distribution network has therefore been substantially reinforced in emerging markets: China (+24%(1)), India (+29%(1)), Russia (+23%(1)), Brazil (+17%(1)).
Two subsidiaries were created in Vietnam and Sub-Saharan Africa. At the same time, structure costs moderately declined(1) in Western Europe. In total, the structure costs to sales ratio was 16.5% in the 2010/11 financial year, a decrease of 15 bps on a like-for-like basis and a reported increase of 10 bps due to the impact of disposals.


Profit from recurring operations

Profit from recurring operations grew +8%(1) to € 1,909 million, which is double the growth rate in 2009/10 (+4%(1)) and higher than the +6%(1) growth target announced at the beginning of the financial year. Operating margin was 25.0%, a rise of 28 bps compared to the previous year (on a like-for-like basis), despite the strong rise in the advertising and promotion expenditure to sales ratio.

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.
All regions contributed to organic growth in profit from recurring operations, including +20%(1) in Asia/Rest of the World, +3%(1) in the Americas, +2%(1) in Europe excluding France and +2%(1) in France.

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

Net financial expenses from recurring operations totalled € 469 million, composed of stable debt- related financial expenses of € 446 million and other net financial expenses from recurring operations of € 23 million, which decreased compared to the previous year, primarily due to the decline in net financial expenses related to retirement benefits.

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%.
Corporate income tax on items from recurring operations was a charge of € 317 million, an effective tax rate of 22% on items from recurring operations, a moderate increase compared to 2009/10 (20.9%). Finally, minority interests and other amounted to € 31 million.

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.


Net profit

Other operating income and expenses from non-recurring operations were a net expense of € 56 million, including net capital gains of € 19 million on disposals (certain Scandinavian and Spanish operations, Suntory equity investment, etc.), intangible asset impairment of € 42 million (primarily relating to Polish vodkas), restructuring costs of € 17 million and other non-recurring charges totalling € 16 million.
Non-recurring financial items was composed of € 11 million of net income. Lastly, income tax on non-recurring items was a net charge limited to € 1 million.

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.




Net debt at 30 June 2011 was € 9,038 million, which was a very substantial reported decrease of € 1,546 million, due to strong cash generation and a very favourable translation adjustment (EUR/USD rate of 1.45 at 30 June 2011 vs. 1.23 at 30 June 2010).

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

A dividend of € 1.44 for the 2010/11 financial year (a 7.5% increase over the last fiscal year) will be subject to approval by the Annual General Meeting of 15 November 2011. This dividend is in line with the usual policy of distribution in cash of about 1/3 of net profit from recurring operations.
Considering the € 0.67 per share interim dividend paid on 6 July 2011, this implies a final dividend of € 0.77 per share. The ex-date for this final dividend will be Thursday 17 November and with payment on Tuesday 22 November 2011.


Conclusion and outlook

In 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)
According to Pierre Pringuet, Chief Executive Officer of the Group:
Our remarkable performance over the 2010/11 financial year demonstrated the relevance of our strategy and of our decentralised model. For 2011/12 the beginning of the financial year confirms the resilience of our markets. We will continue to grow, by capitalising on the strength of our portfolio of brands, the quality of our distribution network and the powerful leverage of emerging markets.” After reiterating the target for a net debt to EBITDA ratio(2) close to 4 at 30 June 2012, he added: “We will pursue the reduction of our debt.”

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


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