RI Ruby Tuesday

SOLID H1 15/16 PERFORMANCE: +3% ORGANIC SALES GROWTH (+7% REPORTED), IN AN ENVIRONMENT THAT REMAINS CONTRASTED

+3% ORGANIC GROWTH IN PROFIT FROM RECURRING OPERATIONS IN H1 (+2% ADJUSTED FOR CHINESE NEW YEAR PHASING) AND +6% REPORTED

FY 15/16 GUIDANCE CONFIRMED:

ORGANIC GROWTH IN PROFIT FROM RECURRING OPERATIONS BETWEEN +1% AND +3%

Regulatory News:

Pernod Ricard (Paris:RI):

Press release - Paris, 11 February 2016

SALES

Sales for H1 15/16 totalled €4,958m. Organic Sales growth was +3%, representing a continued gradual improvement vs. FY 14/15. Reported Sales growth was +7% with a favourable FX impact.

The improvement was driven by the USA:

• Americas: acceleration of growth +4% vs. +2% in FY 14/15, notably driven by USA (+3% in H1 15/16 vs. stable in FY 14/15.)
• Asia-Rest of World: +5% (+4% adjusting for earlier CNY1)
  • Double-digit growth in India, Africa/Middle East and Australia
  • China: -2%, -8% adjusting for earlier CNY1, in continuity of trends observed in Q1
  • Difficulties in Korea and Travel Retail Asia.
• Europe: improvement +1% vs. stable in FY 14/15, driven by Spain and UK, with encouraging growth in most markets. Decline in France and Russia, in part due to technical impacts.

Growth across Top 14, Priority Premium Wines and Key Local Brands:

• Strong performance of Jameson, Martell, The Glenlivet, Perrier-Jouët, Mumm and Indian whiskies
• Difficulties for Chivas (due to Asia and Travel Retail) and Absolut (but improving underlying trends in USA)
• Priority Premium Wines: growth acceleration.

Q2 Sales were €2,734m, +4% in organic growth, with favourable CNY1 phasing. Reported Q2 Sales were up +6%, due to a stronger USD partly offset by Emerging market currencies.

Success of consistent long-term approach:

• Market share gains in most key markets
• Sustained A&P investment driving encouraging results on innovation: +1% out of overall Group Sales growth of +3% in H1 15/16
• Return to positive pricing: +1%.

_____________________

1 Chinese New Year (“CNY”) on 8 February 2016 vs. 19 February 2015

RESULTS

H1 15/16 Profit from Recurring Operations was €1,438m, with solid organic growth of +3% (+2% adjusted for CNY2) and +6% reported:

• Gross margin pressure easing: -25bps in H1 15/16 vs. -105bps in FY 14/15
  • Improving pricing: +1%
  • Negative mix driven by geography (India growth vs. China decline)
  • Tight management of costings: stable Cost Of Goods Sold at comparable mix
• Sustained investment in A&P: +6%, partly due to phasing, to support key innovation projects (Elyx, Tequila Avión) and must-win markets (USA)
• Modest increase in structure costs.

Reported Group share of Net profit from recurring operations was €909m, +9% compared to H1 14/15.

Reported Group share of Net profit was €886m, +12% compared to H1 14/15.

FREE CASH FLOW AND DEBT

Cash generation was strong, with Recurring Free Cash Flow of €544m, +10% vs. H1 14/15.

Net debt increased by €237m to €9,258m mainly driven by a (€177m) mechanical FX impact, due to variation of EUR/USD parity between 30 June 2015 at 1.12 and 31 December 2015 at 1.09.

The average cost of debt reduced to 4.2% vs. 4.6% in H1 14/15, as expected.

The Net debt / Ebitda ratio at average rates was <3.6 at 31/12/15, down from 3.7 at 31/12/14. The ratio increased vs. <3.5 at 30/06/15, linked mainly to cash seasonality3.

As part of this communication, Alexandre Ricard, Chairman and Chief Executive Officer, declared, “Our half year results are solid, delivering a continued improvement in Sales. Our strategy has remained consistent and is driving results, in particular in terms of innovation.

For full year FY15/16, in a still contrasted macroeconomic environment, we plan to continue improving our business performance year-on-year vs. FY 14/15. We will continue to support priority markets, brands and innovations while focusing on operational excellence. We expect to deliver organic growth in Profit from Recurring Operations in line with the guidance of +1% to +3% 4.”

All growth data specified in this press release refers to organic growth (at constant FX and Group structure), unless otherwise stated.

A detailed presentation of Sales for the first half of 2015/16 can be downloaded from our website: www.pernod-ricard.com

About Pernod Ricard

Pernod Ricard is the world’s co-leader in wines and spirits with consolidated Sales of € 8,558 million in 2014/15. 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 18,000 people and operates through a decentralised organisation, with 6 “Brand Companies” and 80 “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.

__________________

2 Chinese New Year (“CNY”) on 8 February 2016 vs. 19 February 20153 Average EUR/USD rate of 1.29 in H1 14/15, 1.20 for FY 14/15 and 1.10 in H1 15/164 Over the full 2015/16 financial year, the foreign exchange impact on Profit from recurring operations is estimated at approximately +€ 20 million, based on average FX rates for full FY 2015/16 projected on 29 January 2016 , particularly a EUR/USD rate of 1.10

Appendices

Emerging Markets

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 Georgia Gabon Senegal Dominican Republic Hungary Ghana South Africa Ecuador Kazakhstan India Sri Lanka Guatemala Kosovo Indonesia Syria Honduras Latvia Iraq Tanzania Mexico Lithuania Ivory Coast Thailand Panama Macedonia Jordan Tunisia Paraguay Moldova Kenya Turkey Peru Montenegro Laos Uganda Puerto Rico Poland Lebanon Vietnam Uruguay Romania Madagascar Zambia Venezuela Russia Serbia Ukraine  

Top 14 brands Organic Growth

 

Organic Sales

growth

H1 15/16

  Volumes   Price/mix     Absolut -3% -2% -1% Chivas Regal -2% -4% 2% Ballantine's 0% 2% -2% Ricard -8% -6% -1% Jameson 11% 8% 3% Havana Club 3% 1% 2% Malibu 0% 0% 0% Beefeater 5% 4% 0% Kahlua -5% -5% 0% Martell 7% 9% -2% The Glenlivet 7% 2% 5% Royal Salute 6% 4% 1% Mumm 4% 7% -3% Perrier-Jouët 10% 10% -1% Top 14 2% 0% 2%  

Sales Analysis by Period and Region

Net Sales

(€ millions)

  Q1 14/15   Q1 15/16   Change   Organic Growth   Group Structure   Forex impact             Europe 652 32,0% 658 29,6% 7 1% 20 3% (1) 0% (12) -2% Americas 530 26,0% 627 28,2% 97 18% 33 6% (4) -1% 68 13% Asia / Rest of the World 855   42,0% 938   42,2% 82   10% 7   1% (2)   0% 77   9% World 2 037   100,0% 2 223   100,0% 186   9% 61   3% (8)   0% 133   7%                                         Net Sales

(€ millions)

Q2 14/15 Q2 15/16 Change Organic Growth Group Structure Forex impact   Europe 927 35,9% 911 33,3% (16) -2% (6) -1% (3) 0% (7) -1% Americas 712 27,5% 742 27,1% 31 4% 14 2% (24) -3% 41 6% Asia / Rest of the World 945   36,6% 1 081   39,5% 135   14% 83   9% (1)   0% 54   6% World 2 584   100,0% 2 734   100,0% 150   6% 90   4% (28)   -1% 88   3%                                         Net Sales

(€ millions)

H1 14/15 H1 15/16 Change Organic Growth Group Structure Forex impact   Europe 1 579 34,2% 1 570 31,7% (9) -1% 14 1% (4) 0% (19) -1% Americas 1 242 26,9% 1 369 27,6% 128 10% 47 4% (28) -2% 109 9% Asia / Rest of the World 1 801   39,0% 2 019   40,7% 218   12% 90   5% (3)   0% 131   7% World 4 621   100,0% 4 958   100,0% 336   7% 151   3% (35)   -1% 221   5%  

Summary Consolidated Income Statement

Consolidated income statement         (€ millions) 31/12/2014 31/12/2015 Change               Net sales   4 621   4 958   7% Gross Margin after logistics costs   2 889   3 078   7% A&P expenditure   (819)   (908)   11% Contribution after A&P expenditure   2 070   2 170   5% Structure costs   (712)   (732)   3% Profit from Recurring Operations   1 358   1 438   6% Financial income/(expense) from recurring operations (235) (217) -8% Corporate income tax on items from recurring operations (284) (302) 6% Net profit from discontinued operations, non-controlling interests and share of net income from associates   (6)   (10)   57% Group share of net profit from recurring operations   834   909   9%   Other operating income & expenses (28) (35) NA Non-recurring financial items (11) (1) NA Corporate income tax on items from non recurring operations (7) 13 NA               Group share of net profit   788   886   12% Non-controlling interests   7   10   48% Net profit   795   896   13%  

Profit from Recurring Operations by Region

World                                                               (€ millions) H1 14/15 H1 15/16 Change Organic Growth Group Structure Forex impact   Net sales (Excl. T&D) 4 621 100,0% 4 958 100,0% 336 7% 151 3% (35) -1% 221 5% Gross margin after logistics costs 2 889 62,5% 3 078 62,1% 188 7% 82 3% (12) 0% 118 4% Advertising & promotion (819) 17,7% (908) 18,3% (88) 11% (45) 6% 3 0% (46) 6% Contribution after A&P 2 070   44,8% 2 170   43,8% 100   5% 37   2% (9)   0% 72   3% Profit from recurring operations   1 358   29,4% 1 438   29,0% 79   6% 35   3% (10)   -1% 54   4%   Asia / Rest of World                                       (€ millions) H1 14/15     H1 15/16 Change     Organic Growth Group Structure Forex impact   Net sales (Excl. T&D) 1 801 100,0% 2 019 100,0% 218 12% 90 5% (3) 0% 131 7% Gross margin after logistics costs 1 093 60,7% 1 229 60,9% 136 12% 46 4% (0) 0% 90 8% Advertising & promotion (296) 16,4% (350) 17,3% (54) 18% (28) 9% (0) 0% (26) 9% Contribution after A&P 797   44,3% 879   43,6% 82   10% 18   2% (0)   0% 64   8% Profit from recurring operations 570   31,7% 645   31,9% 74   13% 19   3% (0)   0% 55   10%   Americas                                       (€ millions) H1 14/15 H1 15/16 Change Organic Growth Group Structure Forex impact   Net sales (Excl. T&D) 1 242 100,0% 1 369 100,0% 128 10% 47 4% (28) -2% 109 9% Gross margin after logistics costs 808 65,1% 890 65,0% 82 10% 23 3% (11) -1% 70 9% Advertising & promotion (242) 19,5% (277) 20,2% (35) 15% (16) 7% 3 -1% (22) 9% Contribution after A&P 566   45,6% 613   44,8% 47   8% 6   1% (8)   -1% 48   9% Profit from recurring operations   375   30,2% 400   29,2% 24   7% (1)   0% (8)   -2% 34   9%   Europe                                       (€ millions) H1 14/15 H1 15/16 Change Organic Growth Group Structure Forex impact   Net sales (Excl. T&D) 1 579 100,0% 1 570 100,0% (9) -1% 14 1% (4) 0% (19) -1% Gross margin after logistics costs 988 62,6% 959 61,1% (30) -3% 14 1% (1) 0% (42) -4% Advertising & promotion (282) 17,9% (281) 17,9% 1 0% (1) 0% 0 0% 2 -1% Contribution after A&P 706   44,7% 677   43,1% (29)   -4% 12   2% (1)   0% (40)   -6% Profit from recurring operations 412   26,1% 393   25,0% (19)   -5% 17   4% (1)   0% (35)   -8%  

Foreign Exchange Impact

Forex impact H1 15/16

(€ millions)

    Average rates evolution  

On Net

Sales

 

On Profit

from

Recurring

H1 14/15   H1 15/16   %

Operations

                    US dollar USD 1,29 1,10 -14,3% 163 69 Chinese yuan CNY 7,92 7,00 -11,6% 56 37 Indian rupee INR 78,85 72,22 -8,4% 37 15 Pound sterling GBP 0,79 0,72 -9,1% 25 (8) Russian rouble RUB 53,98 71,40 32,3% (32) (17) Other currencies               (28) (41) Total               221 54

Note : Impact on PRO includes strategic hedging on Forex

Sensitivity of profit and debt to EUR/USD exchange rate

Estimated impact of a 1% appreciation of the USD and linked currencies(1)   Impact on the income statement(2) (€ millions) Profit from recurring operations +15 Financial expenses (3) Pre-tax profit from recurring operations +12   Impact on the balance sheet (€ millions) Increase/(decrease) in net debt +59   (1) CNY, HKD (2) Full-year effect  

Balance Sheet

Consolidated Balance Sheet           Assets 6/30/2015 12/31/2015 (€ millions)     (Net book value) Non-current assets Intangible assets and goodwill 17 706 17 843 Tangible assets and other assets 2 933 3 023 Deferred tax assets 2 339 2 420 Total non-current assets 22 978 23 286   Current assets Inventories 5 351 5 311 Receivables (*) 1 152 1 789 Other current assets 260 261 Tax receivable 61 82 Cash and cash equivalents and current derivatives 595 564 Total current assets 7 419 8 007   Assets held for sale 1 1   Total assets 30 398 31 294   (*) after disposals of receivables of: 591 861           Liabilities and shareholders’ equity 6/30/2015 12/31/2015 (€ millions)       Group Shareholders’ equity 13 121 13 681 Non-controlling interests 167 163 of which profit attributable to non-controlling interests 19 10 Total Shareholders’ equity 13 288 13 843   Non-current provisions and deferred tax liabilities 4 427 4 564 Bonds 6 958 7 562 Non-current financial liabilities and derivative instruments 587 370 Total non-current liabilities 11 972 12 496   Current provisions 173 138 Operating payables 1 696 1 887 Other operating payables 920 721 Tax payable 116 196 Bonds 1 514 1 390 Current financial liabilities and derivatives 719 624 Total current liabilities 5 138 4 956   Liabilities held for sale 0 0   Total current liabilities 30 398 31 294  

Analysis of Working Capital Requirement

(€ millions)   June

2014

  December

2014

  June

2015

  December

2015

   

H1 14/15

WC change*

 

H1 15/16

WC change*

  Aged work in progress 3 963 4 127 4 430 4 416 89 45 Advances to suppliers for wine and ageing spirits 6 14 8 13 8 6 Payables on wine and ageing spirits 97 149 107 148 52 42 Net aged work in progress   3 872   3 992   4 331   4 281 45   9   Trade receivables before factoring/securitization 1 469 2 390 1 674 2 571 910 956 Advances from customers 3 3 3 1 (1) (2) Other receivables 243 266 305 312 15 12 Other inventories 833 767 847 824 (61) (3) Non-aged work in progress 65 68 73 71 (1) 0 Trade payables and other 1 963 2 236 2 208 2 419 224 253 Gross operating working capital 645 1 252 689 1 359 639 715   Factoring/Securitization impact 479 733 591 861 (240) (270) Net Operating Working Capital   165   520   98   497 399   445   Net Working Capital   4 037   4 512   4 428   4 778 444   455   * without FX effects and reclassifications

Of which recurring variation

444 459

Of which non recurring variation

1 (4)  

Change in Net Debt

(€ millions)   31/12/2014   31/12/2015   Self-financing capacity before interest and tax   1 389   1 495 Decrease (increase) in working capital requirements (444) (455) Financial result and tax cash (406) (391) Net acquisitions of non financial assets and others (137) (159) Free Cash Flow   402   490 Disposals/acquisitions assets and others (122) (68) Change in Group structure Dividends and others (445) (483) Decrease (increase) in net debt (before currency translation adjustments)   (165)   (60) Foreign currency translation adjustment (517) (177) Decrease (increase) in net debt (after currency translation adjustments)   (681)   (237) Initial net debt (8 353) (9 021) Final net debt (9 034) (9 258)  

Debt Maturity at 31 December 2015

 [Missing charts are available on the original document and on www.pernod-ricard.com]

• Available cash at end December 2015: €0.5 billion in cash and €2.0 billion in available credit facilities
• € 500m bond issue in September 15 (8-year maturity, coupon 1.875%)

Gross Debt Hedging at 31 December 2015

 [Missing charts are available on the original document and on www.pernod-ricard.com]

• Natural debt hedging maintained: EUR/USD breakdown close to that of EBITDA
• Large part of Gross debt at fixed rates (81%)

Bond Details

Currency   Par value   Coupon   Issue date   Maturity date              

 

€ 1,200 m   4.875%   3/18/2010   3/18/2016 € 1,000 m   5.000%   3/15/2011   3/15/2017

EUR

€ 850 m 2.000% 3/20/2014 6/22/2020 € 650 m 2.125% 9/29/2014 9/27/2024 € 500 m 1.875% 9/28/2015 9/28/2023              

 

$ 1,000 m   5.750%   4/7/2011   4/7/2021 $ 1,500 m   4.450%   10/25/2011   1/15/2022

USD

$ 2,500 m o/w:

 

$ 850 m at 5 years

2.950% 1/12/2012 1/15/2017

$ 800 m at 10.5 years

4.250% 7/15/2022

$ 850 m at 30 years

  5.500%       1/15/2042  

Number of shares used in diluted EPS calculation

(x 1,000)   H1       H1 14/15 15/16 Number of shares in issue at end of period 265,422 265,422 Weighted average number of shares in issue (pro rata temporis) 265,422 265,422 Weighted average number of treasury shares (pro rata temporis) (1,493) (1,490) Dilutive impact of stock options and performance shares 2,115 1,698 Number of shares used in diluted EPS calculation 266,043 265,630   (€ millions and €/share)       H1       H1       reported 14/15 15/16

∆

Group share of net profit from recurring operations 834 909 +9% Diluted net earnings per share from recurring operations 3.13 3.42 +9%  

View source version on businesswire.com: http://www.businesswire.com/news/home/20160210006645/en/

Pernod RicardJulia Massies, +33 (0)1 41 00 41 07VP, Financial Communication & Investor RelationsorSylvie Machenaud, +33 (0)1 41 00 42 74Director External CommunicationsorAlison Donohoe, +33 (0)1 41 00 42 14Investor Relations ManagerorEmmanuel Vouin, +33 (0)1 41 00 44 04Press Relations Manager