First Quarter FY24 Sales and Results

Sales for Q1 FY24 totalled €3,042m, an organic decline of -2% and -8% reported with an overall unfavorable Forex impact , partly offset by Group structure . As expected, we experienced soft start to the year, notably with USA in decline, reflecting high comparison basis and a normalizing market context. We also cycled high comparatives in China coupled with soft consumer demand. This was partly offset by a very dynamic performance in the rest of Asia, modest growth in India, resilience in Europe, and stability in Travel Retail, illustrating the Group’s broad and diversified geographic footprint.
Strong price/mix effect +7%, notably benefiting from last year’s price increases across brands and markets.

In Must-Win markets, organic Net Sales were as follows:
USA -8%,

• Consumer demand remained resilient over the summer as the market continues to normalize
• Net Sales declined on unfavorable comparison basis, also reflecting inventory adjustments, in particular at retailer level
• Share gains with Jameson, Código, Malibu, Kahlua and The Glenlivet
• Strong activation plans ahead of festive season
• Positive outlook for the full year.

China -8%,

• Sales declined in a challenging macroeconomic environment with softer consumer demand, amplified by high comparison basis as we cycle a record FY23 Mid Autumn Festival
• Solid price effect following FY23 price increases in May
• Positive outlook for the full year.

India +1%,

• Modest growth against a high comparison base
• Strong consumer fundamentals supporting strong growth for the full year with easing comparison basis and very solid activation plans ahead of festive season in Q2
• Good price/mix for Seagram’s whiskies with continued strategic focus on higher end of the range
• Continued strong development of Strategic International Brands.

Global Travel Retail stable,

• Passenger traffic at c. 90% vs. pre Covid
• Gradual recovery in Asia but Sales impacted by shipment phasing and high comparison basis in Europe
• Strong growth expected for the full year.

By regions:
Europe: +1%, cycling a strong summer season, with growth mainly driven by Germany, France and Poland: 

• France: growth driven by strong performance of Ricard notably in the On-trade, enhanced by summer activations
• Spain: decline on high comparison basis as we cycle On-trade recovery and revenge conviviality last summer
• Germany: solid growth driven by Jameson and Absolut
• UK: stable, with strong share performance in the On-trade o Central Europe: double-digit growth of Poland on low comparison basis.

Asia-RoW: stable, with strong growth excluding China, notably in Turkey, Nigeria, East and South East Asia and Travel Retail: 

• Japan: double-digit growth driven by Perrier-Jouët, Chivas Regal and Martell, with ongoing On-trade recovery
• Korea: double-digit growth in particular Chivas Regal and successful portfolio expansion notably Jameson 
• South East-Asia: strong growth of Thailand and Philippines
• Africa and Middle East: strong double digit growth driven by Turkey with continued strengh in Scotch as well as white spirit portfolio acceleration. Nigeria also growing strong double digit

Americas: -10%, on very high comparison basis: o

• Canada: decline on unfavorable comparison basis, with robust underlying trends
• Brazil: decline as spirits market normalizes o
• Mexico: decline, notably with weaker tourism impacting On-trade

By brands

• Strategic International Brands: -3%, mainly driven by Martell in China, Jameson and Absolut in the US and Chivas Regal in LATAM partly offset by a strong performance from Ricard and Perrier-Jouët and with growth on Ballantine’s, The Glenlivet, Malibu and Royal Salute
• Strategic Local Brands: +5%, with good momentum of Seagram whiskies portfolio, Olmeca and Kahlua
• Specialty Brands: -6%, good performance from Altos and Jefferson’s more than offset by decline of Lillet and Monkey 47 notably in Europe, on high comparison basis following strong summer last year •
• Strategic Wines: -7%, mainly driven by decline of Jacob’s Creek in India and Campo Viejo in USA.

Outlook
We remain confident in our FY23 to FY25 mid-term financial framework aiming for the upper end of +4% to +7% Organic Net Sales growth and +50/+60bps organic operating margin improvement. In a challenging environment, we expect for FY24:

• Broad-based and diversified Organic Net Sales growth, with a positive outlook on US and China and strong growth in Travel Retail and India
• Adapting to easing inflationary pressures
• Continued focus on Revenue Growth Management and operational efficiencies
• Consistent A&P ratio at c. 16% of Net Sales, dynamically optimized through Key Digital Programs
• Disciplined investments in structure
• Leading to organic operating Margin expansion
• Significant investments in Capex c. €0.8bn-€1bn range and in strategic inventories with a similar level to FY23 to sustainably support future growth
• Share buyback of €500m to €800m with c. €150m executed in Q1
• Negative FX impact partially offset by perimeter

Alexandre Ricard, Chairman and Chief Executive Officer, stated, “As expected we experienced a soft start to the year, yet I am encouraged we have largely offset declines in US and China this quarter, thanks to our good performance in other markets. Our strategy over many years has been to build a diversified portfolio and broad geographic footprint across mature and emerging markets. This strategy provides us with the resilience to weather challenging times enabling a consistently solid performance. In the months to come I look forward to sharing with you exciting brand activations and innovations across our full portfolio. I am confident that we can deliver broad-based and diversified organic sales growth in FY24”.