Slow Start With China and US Refusing to Post Q1 Organic Sales -5.9% and Reported -8.5% According to Investing.com

PARIS–( BUSINESS WIRE )–Regulatory News:

Pernod Ricard (EPA:) (Paris: RI):

Press Release ” Paris, October 17, 2024

Sales for Q1 FY25 totaled €2,783mOrganic decline of -5.9% and -8.5% reported, with an unfavorable Foreign Exchange impact of – €103m mainly linked to the Argentine Peso, Turkish Lira and Nigerian Naira, partially offset by a positive peripheral impact + €22m.

We experienced a slow start to the year, particularly with China falling sharply, in the context of continued macroeconomic weakness affecting consumer sentiment, and the US declining, reflecting sales performance boosted by inventory adjustments. Monthly sales results were softer than previously expected as weakness in China also affected Asia Travel Retail. In addition, in India, where the underlying growth is strong, but we face technical sales phasing, expected to fully reverse in Q2. Finally, the market in Europe experienced bad weather conditions during the summer.

Our broad geographic base allows us to present a strong showing in several markets across all regions, to mitigate these declines. Markets of note include Japan, Canada, Poland, Brazil, Turkey, Nigeria and Travel Retail in the Americas and Europe.

Overall volume was stable, with a price/mix effect of -6% in a moderate price environment and a negative market mix due to performance in the US and China.

By region, Must Win markets include:

• America -5%,
  • US -10%,
    • The Spirits market continues as normal
    • Pernod Ricard sales value c.-5%, with Net Sales reflecting inventory adjustments
    • Jameson’s performance is broadly in line with the direct competitive set
    • Plan strong activations and protect your marketing investment in our key brands, ahead of the festive season
    • For a full year, we expect a gradual increase in sales
  • Canada: strong growth, especially from the newly acquired RTD brand
  • Brazil: strong results, lapping base comparison is favorable
  • Mexico: refuse, especially with weak tourism impact On-trade
• Asia-RoW -8%,
  • India +2%,
    • Solid sales growth, affected by phasing, is expected to reverse in Q2
    • Strong sales growth, with the market continuing to enjoy a dynamic consumer base
    • Perform at the forefront of the industry, consolidating leadership positions
    • Strong performance from Royal Stag, Blenders Pride, Jameson, all double growth
    • Strong growth is expected for the full year
  • China -26%,
    • Sharp’s (OTC:) sales fell amid a challenging macroeconomic environment with weak consumer demand over the summer and into the Mid-Autumn Festival
    • Net sales were down at Martell Cognac and Scotch, while premium brands including Jameson, Beefeater, Kahlúa and Olmeca were growing strongly.
    • Further to the announcement by MOFCOM for the implementation of temporary duty deposits effective from Friday 11 October, actions are being taken to reduce the impact on the group’s performance.
    • Given the current weak environment, we expect a more significant year-on-year decline than last year
  • Stock gains and continued strong growth in Japan, while declining in Korea, as the macroeconomic environment remains weak
  • Strong results in Africa and the Middle East, especially in Turkey with Chivas Regal and Ballantine
• Europe -3% (ex-Russia +1%),
  • Strong performance in Europe excluded Russia, although Western European markets were particularly affected by bad summer weather
  • Gain market share in France, Germany and Poland
  • Solid performance from Ballantine, Mumm and RTDs
• Global Travel Retail +3%,
  • Strong growth in all regions except Asia, with good growth for Absolut, Jameson and Ballantine
  • Weak consumer sentiment is weighing on Chinese tourist spending, which is expected to remain steady for the rest of the year

By brand:

• Strategic International Brands -10%, mainly led by Martell in China, Royal Salute in Korea and The Glenlivet in the US
• Strategic Local Brands +1%, with the continued spirit of the Seagram and Kahlúa whiskey portfolio
• Specialty Brands -9%, largely driven by the performance of the US market, albeit with good results from Spiced Irish whiskey, Redbreast and Spot Range
• RTDs: strong double-digit growth led by Absolut and Ace Beverage

Outlook

Leveraging our diversified portfolio and balanced footprint, we express our confidence in our mid-term financial framework targeting top end +4% to +7% organic Net Sales growth and +50bps / +60bps organic Operating Margin expansion.

For FY25, we expect Full-year organic Net Sales to return to growth with continued volume recovery and to maintain organic Operating Margins.

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

Definition and reconciliation of non-IFRS measures to IFRS measures

Pernod Ricard’s management process is based on the following non-IFRS measures chosen for planning and reporting. The Group’s management believes that these measures provide additional information useful to users of the financial statements in understanding the Group’s performance. These non-IFRS measures should be considered complementary to the same IFRS measures and reported movements.

Organic growth

• Organic growth is calculated after excluding the impact of exchange rate movements, acquisitions and disposals, changes in applicable accounting principles and hyperinflation.
• The exchange rate impact is calculated by translating the current year’s results at the previous year’s exchange rate and adding the year-to-year variance in the impact of reported transactions between the current year and the previous year.
• For acquisitions in the current year, post-acquisition results are excluded from organic movement calculations. For acquisitions in the previous year, post-acquisition results are included in the previous year but are included in the organic movement calculations in the current year only from the anniversary date of the acquisition.
• The impact of hyperinflation on the Profitability of Recurring Operations in Turkey and Argentina is excluded from the calculation of organic growth by limiting the increase in local unit prices/costs to a maximum of +26% per year, equal to +100% in three years.
• If a business, brand, brand distribution rights or agency agreement is disposed of or terminated in the previous year, the Group does not include the results for that business from the previous year in the organic movement calculations. For disposals or terminations in the current year, the Group excludes the results for the business from the previous year from the date of disposal or termination.
• This measure allows users to compare the Group’s performance on a like-for-like basis, focusing on the areas that local management can most directly influence.

The benefits of continuous operation

‹Profit from recurring operations corresponds to operating profit excluding non-recurring operating income and expenses.

About Pernod Ricard

Pernod Ricard is a worldwide leader in the spirits and wine industry, combining traditional craftsmanship, state-of-the-art brand building, and global distribution technology. The premium premium portfolio of luxury brands includes Absolut vodka, Ricard pastis, Ballantine’s, Chivas Regal, Royal Salute, and Glenlivet Scotch whiskey, Jameson Irish whiskey, Martell cognac, Havana Club rum, Beefeater gin, Malibu liqueur and Mumm and Perrier- You’re not champagne . Our mission is to ensure the long-term development of our brand by respecting people and the environment, while empowering our employees worldwide to be ambassadors of an authentic culture that is purposeful, inclusive and responsible. Pernod Ricard’s combined sales totaled €11,598 million in fiscal year FY24.

Pernod Ricard is listed on Euronext (Ticker: RI; ISIN Code: FR0000120693) and is part of and Eurostoxx 50 index.

Attachment

The Financial Table can be consulted on www.pernod-ricard.com

Future communications

Login details for the October 17, 2024 conference call

Available in the media section of the Pernod Ricard website

See the source version on businesswire.com: https://www.businesswire.com/news/home/20241016899164/en/

Florence Tresarrieu / Global SVP Investor Relations and Treasury +33 (0) 1 70 93 17 03
Edward Mayle / Director of Investor Relations +33 (0) 6 76 85 00 45
Ines Lo Franco / Investor Relations Manager +33 (0) 1 70 93 17 13
Emmanuel Vouin / Head of External Engagement +33 (0) 1 70 93 16 34

Source: Pernod Ricard