Market Overview

Pernod Ricard: FY20 Half-Year Sales and Results

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Solid H1 FY20 on High Basis of Comparison

+2.7% Organic Sales Growth (+5.6% Reported)

+4.3% Organic Growth in PRO1 (+8.1% Reported)

New FY20 Guidance2 Reflecting Current COVID-19 Assumptions:

Organic Growth in PRO Between +2% and +4%

Regulatory News:

Press release - Paris, 13 February 2020

Pernod Ricard (Paris:RI):

SALES

Sales for H1 FY20 totalled €5,474m, with organic growth of +2.7% and reported growth of +5.6%, with a favourable FX impact linked to USD and Emerging market currency appreciation vs. Euro.

Pernod Ricard delivered solid results in a challenging environment, with broad-based growth:

  • Diversified growth across Regions, with robust performance of Must-win markets USA, India and China, further enhanced by earlier Chinese New Year3
  • Dynamic performance of Strategic International Brands, in particular Jameson, Martell, The Glenlivet, Malibu, Ballantine's, Royal Salute and Beefeater
  • Continued strong pricing: +2% on Strategic brands
  • Focus on operational excellence and resource allocation, driving strong organic improvement in PRO margin +51bps.

We continued to roll-out the Transform & Accelerate 3-year strategic plan:

  • Implementation of 2030 Sustainability & Responsibility roadmap
  • Launch of Reconquer project to resume growth in France and reorganisation of Wine business to reignite its performance
  • Active portfolio management: completion of TX, Rabbit Hole and Castle Brands acquisitions.

Sales growth was robust, with a very strong basis of comparison: +2.7% vs +7.8% in H1 FY19. The Must-win markets posted the following performance:

  • USA: +4%, good growth driven by Whiskies and Specialty brands
  • China: +11%, strong H1 on a high comparison basis (H1 FY19 +28%), enhanced by earlier Chinese New Year3
  • India: +5% good H1 in a volatile context, with a high basis of comparison (H1 FY19 +24%)
  • Travel Retail: robust Sell-out, but H1 FY20 impacted by shipment phasing.

There was diversified growth throughout the Regions:

  • Americas +2%: good growth in USA partially offset by weaker Mexican market and phasing in Travel Retail
  • Asia-RoW +3%: growth driven mainly by China and India, dampened by the transfer of Imperial Korea to a third-party distributor
  • Europe +3%: strong growth with improving trends, driven by Germany, UK and Eastern Europe acceleration, but difficulties remaining in France.

Q2 Sales were €2,991m, with +3.8% organic growth (+6.9% reported), following a soft Q1 FY20 (at +1%), and enhanced by earlier Chinese New Year.

RESULTS

H1 FY20 PRO was €1,788m, with organic growth of +4.3% and +8.1% reported. For full-year FY20, the FX impact on PRO is estimated at c. +€70m4.

The H1 organic PRO margin was up by +51bps, thanks to:

  • Strong pricing on Strategic brands: +2%
  • Gross margin in slight decline -15bps, following particularly strong H1 FY19 (+71bps):
    • Positive impact of earlier Chinese New Year but negative mix of India
    • Cost of Goods headwinds (in particular agave and grain neutral spirit (GNS) in India)
  • A&P: increase broadly in line with Sales, with strong arbitration and focus behind strategic priorities
  • Structure: -2% thanks to strong discipline and favourable phasing (growth expected for full-year FY20)
  • Positive FX impact of +€59m thanks mainly to USD (EUR/USD 1.11 in H1 FY20 vs. 1.15 in H1 FY19) and Emerging market currency appreciation vs. Euro

The H1 FY20 corporate income tax rate on recurring items was c.24%; the rate is expected at c. 25% for full-year FY20.

Group share of Net PRO was €1,216m, +10% reported vs. H1 FY19, thanks mainly to strong improvement in PRO.

Group share of Net profit was €1,032m, +1% reported vs. H1 FY19, despite strong improvement in PRO due mainly to non-recurring items.

FREE CASH FLOW AND DEBT

Free Cash Flow was €570m, while increasing Capex and the ageing stock inventory build, as expected.

Net debt increased by €1,608m5 vs. 30 June 2019 to €8,228m at 31 December 2019 due mainly to increased M&A cash-out, an increased dividend payment and the start of the share buy-back programme6 with €223m purchased in H1 FY20. In H2 FY20, the programme will continue, with a new clip of €300m maximum, to be executed by 30 June 2020.

The Net Debt/EBITDA ratio at average rates7 was 2.7x at 31 December 2019.

As part of this communication, Alexandre Ricard, Chairman and Chief Executive Officer, declared, "H1 FY20 demonstrated solid growth and resilience of our business model. Our 3 year-plan Transform& Accelerate is driving success, as evidenced by the diversification of the sources of growth in terms of geographic footprint and categories, continued strong pricing and ultimately the improvement in operating leverage.

Looking to H2 FY20, the environment remains particularly uncertain from a geopolitical standpoint, with the additional pressure related to the COVID-19 outbreak. While we cannot currently predict the duration and extent of the impact, we remain confident in our strategy. Our first priority is to ensure the safety and wellbeing of our employees and business partners. I would like to praise the exemplary behaviour of our teams during this difficult time. We fully support their efforts, as well as those of the Chinese people and authorities to contain the epidemic.

Assuming a severe impact of COVID-19, mainly on Q3 FY20, we are at this stage providing a guidance of organic growth in Profit from Recurring Operations for full-year FY20 of +2% to +4% and will continue to closely monitor our environment. We will stay the strategic course and maintain priority investments in order to continue maximising long-term value creation."

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

A detailed presentation of H1 FY20 Sales and Results can be downloaded from our website: www.pernod-ricard.com

Audit procedures have been carried out on the half-year financial statements. The Statutory Auditors' report will be issued following their review of the management report.

Definitions and reconciliation of non-IFRS measures to IFRS measures

Pernod Ricard's management process is based on the following non-IFRS measures which are chosen for planning and reporting. The Group's management believes these measures provide valuable additional information for users of the financial statements in understanding the Group's performance. These non-IFRS measures should be considered as complementary to the comparable IFRS measures and reported movements therein.

Organic growth

Organic growth is calculated after excluding the impacts of exchange rate movements and acquisitions and disposals.

Exchange rates impact is calculated by translating the current year results at the prior year's exchange rates.

For acquisitions in the current year, the post-acquisition results are excluded from the organic movement calculations. For acquisitions in the prior year, post-acquisition results are included in the prior year but are included in the organic movement calculation from the anniversary of the acquisition date in the current year.

Where a business, brand, brand distribution right or agency agreement was disposed of, or terminated, in the prior year, the Group, in the organic movement calculations, excludes the results for that business from the prior year. For disposals or terminations in the current year, the Group excludes the results for that business from the prior year from the date of the disposal or termination.

This measure enables to focus on the performance of the business which is common to both years and which represents those measures that local managers are most directly able to influence.

Profit from recurring operations

Profit from recurring operations corresponds to the operating profit excluding other non-current operating income and expenses.

1 PRO: Profit from Recurring Operations

2 Guidance given to market on 29 August 2019 of organic PRO growth between +5% and +7%

3 Chinese New Year: 25 January 2020 vs. 5 February 2019

4 Based on average FX rates projected on 11 February 2020, particularly a EUR/USD rate of 1.11

5 Including €531m of lease liability, pursuant to implementation of IFRS16 norm

6 of up to €1bn over FY20 and FY21, announced on August 29th, 2019

7 Based on average EUR/USD rates: 1.12 in 2019

About Pernod Ricard

Pernod Ricard is the No.2 worldwide producer of wines and spirits with consolidated sales of €9,182 million in FY19. Created in 1975 by the merger of Ricard and Pernod, the Group has developed through organic growth and acquisitions: Seagram (2001), Allied Domecq (2005) and Vin&Sprit (2008). Pernod Ricard, which owns 16 of the Top 100 Spirits Brands, holds one of the most prestigious and comprehensive brand portfolios in the industry, including: 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, Malibu liqueur, Mumm and Perrier-Jouët champagnes, as well Jacob's Creek, Brancott Estate, Campo Viejo, and Kenwood wines. Pernod Ricard's brands are distributed across over 160 markets, and by its own direct salesforce in 73 markets. The Group's decentralised organisation empowers its 19,000 employees to be true on-the-ground ambassadors of its vision of "Créateurs de Convivialité." As reaffirmed by the Group's three-year strategic plan, "Transform and Accelerate," deployed in 2018, Pernod Ricard's strategy focuses on investing in long-term, profitable growth for all stakeholders. The Group remains true to its three founding values: entrepreneurial spirit, mutual trust, and a strong sense of ethics. As illustrated by the 2030 roadmap supporting the United Nations Sustainable Development Goals (SDGs), "We bring good times from a good place." In recognition of Pernod Ricard's strong commitment to sustainable development and responsible consumption, it has received a Gold rating from Ecovadis and is ranked No. 1 in Vigeo Eiris for the beverage sector. Pernod Ricard is also a United Nation's Global Compact LEAD company. Pernod Ricard is listed on Euronext (TICKER:RI, ISIN Code: FR0000120693)) and is part of the CAC 40 index.

Appendices

Emerging Markets

Asia-Rest of World   Americas   Europe
Algeria   Mongolia   Argentina   Albania
Angola   Morocco   Bolivia   Armenia
Cambodia   Mozambique   Brazil   Azerbaijan
Cameroon   Myanmar   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
Malaysia       Serbia
      Ukraine

Strategic International Brands' organic Sales growth

Volumes

H1 FY20

 

Organic Sales growth

H1 FY20

 

Volumes

 

Price/mix

(in 9Lcs millions)

 

 

 

 
Absolut

6.3

-1%

1%

-2%

Chivas Regal

2.6

-2%

-3%

1%

Ballantine's

4.4

5%

3%

1%

Ricard

2.4

-5%

-5%

0%

Jameson

4.6

9%

9%

0%

Havana Club

2.5

6%

0%

6%

Malibu

2.0

13%

9%

4%

Beefeater

1.9

12%

13%

-1%

Martell

1.6

4%

-3%

8%

The Glenlivet

0.7

15%

8%

6%

Royal Salute

0.1

17%

12%

5%

Mumm

0.5

-3%

-6%

3%

Perrier-Jouët

0.2

1%

-12%

13%

Strategic International Brands

29.8

4%

2%

2%

Sales Analysis by Period and Region

Net Sales
(€ millions)
H1 FY19 H1 FY20 Change Organic Growth Group Structure Forex impact
 
Americas

1,389

26.8%

1,461

26.7%

72

5%

22

2%

15

1%

35

2%

Asia / Rest of World

2,266

43.7%

2,415

44.1%

149

7%

68

3%

16

1%

64

3%

Europe 

1,530

29.5%

1,598

29.2%

69

4%

47

3%

7

0%

14

1%

World

5,185

100.0%

5,474

100.0%

289

6%

137

3%

39

1%

113

2%

 
 
Net Sales
(€ millions)
Q1 FY19 Q1 FY20 Change Organic Growth Group Structure Forex impact
 
Americas

636

26.6%

674

27.1%

37

6%

14

2%

2

0%

21

3%

Asia / Rest of World

1,084

45.4%

1,116

44.9%

32

3%

(4)

0%

4

0%

32

3%

Europe

667

27.9%

694

27.9%

27

4%

21

3%

2

0%

4

1%

World

2,387

100.0%

2,483

100.0%

96

4%

31

1%

8

0%

57

2%

 
 
Net Sales
(€ millions)
Q2 FY19 Q2 FY20 Change Organic Growth Group Structure Forex impact
 
Americas

753

26.9%

788

26.3%

34

5%

8

1%

13

2%

14

2%

Asia / Rest of World

1,182

42.2%

1,299

43.4%

117

10%

73

6%

12

1%

32

3%

Europe

863

30.8%

904

30.2%

42

5%

26

3%

5

1%

10

1%

World

2,798

100.0%

2,991

100.0%

193

7%

106

4%

31

1%

56

2%

Summary Consolidated Income Statement

(€ millions)   H1 FY19   H1 FY20   Change
       
Net sales   

5,185

 

5,474

 

6%

Gross Margin after logistics costs  

3,239

 

3,419

 

6%

Advertising and promotion expenses  

 (799)

 

 (842)

 

5%

Contribution after A&P expenditure   

2,440

 

2,577

 

6%

Structure costs   

 (786)

 

 (789)

 

0%

Profit from recurring operations   

1,654

 

1,788

 

8%

Financial income/(expense) from recurring operations  

 (157)

 

 (164)

 

5%

Corporate income tax on items from recurring operations  

 (379)

 

 (392)

 

3%

Net profit from discontinued operations, non-controlling interests and share of net income from associates  

 (13)

 

 (15)

 

17%

Group share of net profit from recurring operations  

1,105

 

1,216

 

10%

             
Other operating income & expenses  

 (66)

 

 (152)

  NA
Financial income/(expense) from non-recurring operations  

1

 

 (1)

  NA
Corporate income tax on items from non recurring operations  

 (18)

 

 (31)

  NA
             
Group share of net profit  

1,023

 

1,032

 

1%

Non-controlling interests  

14

 

14

 

4%

Net profit  

1,036

 

1,046

 

1%

Profit from Recurring Operations by Region

World              
               
(€ millions)   H1 FY19   H1 FY20   Change   Organic Growth   Group Structure   Forex impact  
               
Net sales (Excl. T&D)  

5,185

100.0%

 

5,474

100.0%

 

289

6%

 

137

3%

 

39

1%

 

113

2%

 
Gross margin after logistics costs  

3,239

62.5%

 

3,419

62.5%

 

180

6%

 

78

2%

 

20

1%

 

82

3%

 
Advertising & promotion  

(799)

15.4%

 

(842)

15.4%

 

(43)

5%

 

(21)

3%

 

(7)

1%

 

(15)

2%

 
Contribution after A&P  

2,440

47.1%

 

2,577

47.1%

 

136

6%

 

57

2%

 

13

1%

 

66

3%

 
Profit from recurring operations  

1,654

31.9%

 

1,788

32.7%

 

134

8%

 

71

4%

 

3

0%

 

59

4%

 
               
Americas              
               
(€ millions)   H1 FY19   H1 FY20   Change   Organic Growth   Group Structure   Forex impact  
               
Net sales (Excl. T&D)  

1,389

100.0%

 

1,461

100.0%

 

72

5%

 

22

2%

 

15

1%

 

35

2%

 
Gross margin after logistics costs  

942

67.8%

 

986

67.5%

 

44

5%

 

5

1%

 

11

1%

 

28

3%

 
Advertising & promotion  

(276)

19.8%

 

(285)

19.5%

 

(9)

3%

 

(1)

0%

 

(2)

1%

 

(6)

2%

 
Contribution after A&P  

666

48.0%

 

701

48.0%

 

35

5%

 

4

1%

 

9

1%

 

22

3%

 
Profit from recurring operations  

470

33.8%

 

486

33.3%

 

16

3%

 

(8)

-2%

 

5

1%

 

18

4%

 
               
Asia / Rest of the World              
               
(€ millions)   H1 FY19   H1 FY20   Change   Organic Growth   Group Structure   Forex impact  
               
Net sales (Excl. T&D)  

2,266

100.0%

 

2,415

100.0%

 

149

7%

 

68

3%

 

16

1%

 

64

3%

 
Gross margin after logistics costs  

1,353

59.7%

 

1,442

59.7%

 

89

7%

 

38

3%

 

6

0%

 

45

3%

 
Advertising & promotion  

(309)

13.6%

 

(341)

14.1%

 

(32)

10%

 

(20)

7%

 

(4)

1%

 

(8)

2%

 
Contribution after A&P  

1,044

46.1%

 

1,101

45.6%

 

57

5%

 

18

2%

 

2

0%

 

37

4%

 
Profit from recurring operations  

766

33.8%

 

833

34.5%

 

67

9%

 

36

5%

 

(2)

0%

 

33

4%

 
               
Europe              
               
(€ millions)   H1 FY19   H1 FY20   Change   Organic Growth   Group Structure   Forex impact  
               
Net sales (Excl. T&D)  

1,530

100.0%

 

1,598

100.0%

 

69

4%

 

47

3%

 

7

0%

 

14

1%

 
Gross margin after logistics costs  

944

61.7%

 

991

62.0%

 

46

5%

 

35

4%

 

3

0%

 

9

1%

 
Advertising & promotion  

(214)

14.0%

 

(216)

13.5%

 

(2)

1%

 

0

0%

 

(1)

0%

 

(1)

1%

 
Contribution after A&P  

730

47.7%

 

775

48.5%

 

45

6%

 

35

5%

 

2

0%

 

8

1%

 
Profit from recurring operations  

418

27.3%

 

468

29.3%

 

50

12%

 

43

10%

 

(0)

0%

 

7

2%

 

Foreign Exchange Impact

Forex impact H1 FY20

(€ millions)

 

 

Average rates evolution

 

On Net Sales

 

On Profit from

Recurring

Operations

 

 

H1 FY19

 

H1 FY20

 

%

   
           
US dollar USD  

1.15

 

1.11

 

-3.7%

 

50

 

29

Chinese yuan CNY  

7.91

 

7.80

 

-1.3%

 

8

 

6

Indian rupee INR  

81.93

 

78.59

 

-4.1%

 

25

 

8

Russian rouble RUB  

76.13

 

71.19

 

-6.5%

 

10

 

8

Other                

20

 

7

Total                

113

 

59

           

For full-year FY20, a positive FX impact on PRO of c. +€70m is expected1

 

Notes:

Impact on PRO includes strategic hedging on Forex

1. Based on average FX rates projected on 11 February 2020, particularly EUR/USD rate of 1.11

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

(1)

Pre-tax profit from recurring operations

14

 

 

 

Impact on the balance sheet

(€ millions)

Increase/(decrease) in net debt

+41

 
(1) CNY, HKD (2) Full-year effect

Balance Sheet

Assets    30/06/2019   31/12/2019
(€ millions)    
(Net book value)        
Non-current assets        
Intangible assets and goodwill   

                     17,074

 

                     17,640

Tangible assets and other assets  

                       4,002

 

                       3,626

Deferred tax assets  

                       1,590

 

                       1,615

Total non-current assets  

22,665

 

22,882

         
Current assets        
Inventories  

                       5,756

 

                       6,046

aged work-in-progress  

                      4,788

 

                      5,047

non-aged work-in-progress  

                           79

 

                           76

other inventories  

                         889

 

                         923

Receivables (*)   

                       1,226

 

                       2,159

Trade receivables   

                      1,168

 

                      2,101

Other trade receivables  

                           59

 

                           58

Other current assets  

                          359

 

                          302

Other operating current assets  

                         291

 

                         295

Tangible/intangible current assets  

                           67

 

                             7

Tax receivable  

                          105

 

                            89

Cash and cash equivalents and current derivatives  

                          929

 

                       1,180

Total current assets  

8,375

 

9,776

         
Assets held for sale  

                              5

 

                            97

         
Total assets   

31,045

 

32,755

     
(*) after disposals of receivables of:  

674

 

827

     
     
Liabilities and shareholders' equity  

30/06/2019

restated*

 

31/12/2019

(€ millions)    

Group Shareholders' equity

 

15,987

 

15,687

Non-controlling interests  

195

 

220

of which profit attributable to non-controlling interests  

27

 

12

Total Shareholders' equity  

16,182

 

15,907

         
Non-current provisions and deferred tax liabilities  

                       3,584

 

                       3,619

Bonds non-current  

                       6,071

 

                       7,618

Lease liabilities - non-current  

                            -

 

                          424

Non-current financial liabilities and derivative instruments  

379

 

                            92

Total non-current liabilities  

10,034

 

11,753

         
Current provisions  

                          149

 

                          213

Operating payables  

                       2,187

 

                       2,429

Other operating payables  

                       1,058

 

                          770

of which other operating payables  

                         660

 

                         721

of which tangible/intangible current payables  

                         398

 

                           49

Tax payable  

                          307

 

                          389

Bonds - current  

                          944

 

                          948

Lease liabilities - current  

                            -

 

                            93

Current financial liabilities and derivatives  

182

 

                          240

Total current liabilities  

4,826

 

5,082

         
Liabilities held for sale  

                              2

 

                            14

Total liabilities and shareholders' equity  

31,045

 

32,755

Analysis of Working Capital Requirement

(€ millions)

 

June

2018

 

December

2018

 

June

2019

 

December

2019

 

 

H1 FY19 WC

change*

 

H1 FY20 WC

change*

                       
Aged work in progress  

4,532

 

4,581

 

4,788

 

5,047

   

64

 

123

Advances to suppliers for wine and ageing spirits  

10

 

29

 

12

 

13

   

19

 

1

Payables on wine and ageing spirits  

(96)

 

(172)

 

(105)

 

(182)

   

(77)

 

(77)

Net aged work in progress  

4,447

 

4,439

 

4,695

 

4,878

   

7

 

47

                           
Trade receivables before factoring/securitization  

1,641

 

2,704

 

1,842

 

2,928

   

1,054

 

1,070

Advances from customers  

(6)

 

(6)

 

(24)

 

(17)

   

(1)

 

7

Other receivables  

353

 

305

 

338

 

340

   

(1)

 

(20)

Other inventories  

869

 

849

 

889

 

923

   

(16)

 

15

Non-aged work in progress  

71

 

84

 

79

 

76

   

11

 

(3)

Trade payables and other  

(2,471)

 

(2,719)

 

(2,717)

 

(2,951)

   

(238)

 

(206)

Gross operating working capital  

457

 

1,217

 

405

 

1,299

   

809

 

864

                           
Factoring/Securitization impact  

(610)

 

(772)

 

(674)

 

(827)

   

(162)

 

(143)

Net Operating Working Capital  

(153)

 

445

 

(269)

 

472

   

648

 

721

                           
Net Working Capital  

4,294

 

4,884

 

4,427

 

5,350

   

654

 

768

               
* at average rates   Of which recurring variation    

651

 

763

  Of which non recurring variation    

3

 

5

Net Debt

(€ millions)

 

30/06/2019

 

12/31/2019

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

Bonds  

944

 

6,071

 

7,015

 

948

 

7,618

 

8,566

Syndicated loan  

-

 

-

 

-

 

-

 

-

 

-

Commercial paper  

-

 

-

 

-

 

-

 

-

 

-

Other loans and long-term debts  

177

 

363

 

540

 

226

 

81

 

307

Other financial liabilities  

177

 

363

 

540

 

226

 

81

 

307

Gross Financial debt  

1,121

 

6,434

 

7,555

 

1,174

 

7,698

 

8,873

Fair value hedge derivatives – assets  

-

 

 (13)

 

 (13)

 

-

 

 (15)

 

 (15)

Fair value hedge derivatives – liabilities  

-

 

2

 

2

 

-

 

0

 

0

Fair value hedge derivatives  

-

 

 (12)

 

 (12)

 

-

 

 (15)

 

 (15)

Net investment hedge derivatives – assets  

-

 

-

 

-

 

-

 

-

 

-

Net investment hedge derivatives – liabilities  

-

 

-

 

-

 

-

 

-

 

-

Net investment hedge derivatives  

-

 

-

 

-

 

-

 

-

 

-

Net asset hedging derivative instruments – assets  

-

 

-

 

-

 

-

 

-

 

-

Net asset hedging derivative instruments – liabilities  

0

 

-

 

0

 

4

 

-

 

4

Net asset hedging derivative instruments  

0

 

-

 

0

 

4

 

-

 

4

Financial debt after Hedging  

1,121

 

6,422

 

7,543

 

1,178

 

7,684

 

8,862

Cash and cash equivalents  

 (923)

 

-

 

 (923)

 

 (1,152)

 

-

 

 (1,152)

Net financial debt excluding lease liability  

198

 

6,422

 

6,620

 

26

 

7,684

 

7,710

Lease Liability *  

-

 

-

 

-

 

93

 

424

 

517

Net financial debt  

198

 

6,422

 

6,620

 

120

 

8,108

 

8,228

*Lease liabilities at 31 December 2019 include the contract previously qualified as "Financial leases" and disclosed under "Other loans and financial debts" at 30 June 2019 for an amount of €28 million.

Change in Net Debt

(€ millions)   31/12/2018   31/12/2019

Operating profit

 

1,588

 

1,636

Depreciation and amortisation  

111

 

174

Net change in impairment of goodwill, PPE and intangible assets  

26

 

8

Net change in provisions  

4

 

75

Retreatment of contributions to pension plans acquired from Allied Domecq and others  

3

   
Changes in fair value on commercial derivatives and biological assets  

 (5)

 

 (3)

Net (gain)/loss on disposal of assets  

 (1)

 

 (7)

Share-based payments  

18

 

21

Self-financing capacity before interest and tax (1)  

1,744

 

1,903

Decrease / (increase) in working capital requirements  

 (654)

 

 (768)

Net interest and tax payments  

 (374)

 

 (401)

Net acquisitions of non financial assets and others  

 (131)

 

 (164)

Free Cash Flow (2)  

585

 

570

of which recurring Free Cash Flow (3)  

622

 

627

Net acquisition of financial assets and activities and others  

 (103)

 

 (540)

Dividends paid  

 (636)

 

 (843)

(Acquisition) / Disposal of treasury shares  

 (54)

 

 (228)

Decrease / (increase) in net debt (before currency translation adjustments and IFRS 16 non cash impacts)  

 (208)

 

 (1,041)

IFRS 15 opening adjustment  

16

   
Foreign currency translation adjustment  

 (69)

 

 (36)

Non cash impact on lease liabilities (4)      

 (531)

Decrease / (increase) in net debt (after currency translation adjustments and IFRS 16 non cash impacts) (5)  

 (260)

 

 (1,608)

Initial net debt  

 (6,962)

 

 (6,620)

Final net debt  

 (7,223)

 

 (8,228)

Note: IFRS16 impacts are: (1) +56M€ / (2) +42M€ / (3) +38M€ / (4) -531M€ / (5) -489M€    

Net Debt Maturity at 31 December 2019

€ billions

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

Note: Available cash at 31 December 2019: €1.2bn in cash and €2.5bn syndicated credit not used (syndicated credit coming to maturity in June 2024)

Gross Debt after hedging at 31 December 2019

  • 13% floating rate and 87% fixed rate
  • 46% in EUR and 54% in USD

Bond details

Currency   Par value   Coupon   Issue date   Maturity date 
                 
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

  € 600 m  

1.500%

 

5/17/2016

 

5/18/2026

  € 1,500 m o/w:  

 

 

10/24/2019

 

 

  € 500 m  

0.000%

 

 

10/24/2023

  € 500 m  

0.500%

 

 

10/24/2027

  € 500 m  

0.875%

 

 

10/24/2031

       

 

 

 

 

 

USD   $ 1,000 m  

5.750%

 

4/7/2011

 

4/7/2021

  $ 1,500  m  

4.450%

 

10/25/2011

 

1/15/2022

  $ 1,650 m o/w:  

 

 

1/12/2012

 

 

  $ 800 m at 10.5 years  

4.250% 

 

 

7/15/2022

  $ 850 m at 30 years  

5.500%

 

 

1/15/2042

  $ 201  m  

Libor 6m + spread

 

1/26/2016

 

1/26/2021

  $ 600  m  

3.250%

 

6/8/2016

 

6/8/2026

Net Debt / EBITDA ratio evolution

    Closing rate   Average rate(1)
EUR/USD rate Jun FY19 -> Dec FY20 1.14 -> 1.12   1.14 -> 1.12
Ratio at 30/06/2019  

2.3

 

2.3

EBITDA & cash generation excl. Group structure effect and forex impacts

0.1

 

0.1

Group structure(2) and forex impacts

0.2

 

0.3

Ratio at 31/12/2019  

2.7

 

2.7 (3)

   
(1) Last-twelve-month rate
(2) Including IFRS 16 impact   
(3) Syndicated credit leverage ratio restated from IFRS16 is 2.6

Diluted EPS calculation

(x 1,000)  

H1 FY19

 

H1 FY20

 

 

 

 

 

 

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)  

(1,215)

 

(1,462)

 

 

Dilutive impact of stock options and performance shares  

1,274

 

1,303

 

 

Number of shares used in diluted EPS calculation  

265,481

 

265,263

 

 

 

 

 

 

 

 

(€ millions and €/share)  

H1 FY19

 

H1 FY20

 

reported

 

 

 

Group share of net profit from recurring operations  

1,105

 

1,216

 

10.0%

Diluted net earnings per share from recurring operations  

4.16

 

4.58

 

10.1%

Current COVID-19 assumptions, with impact on FY20 PRO

China:

  • On-trade

All outlets closed in February, and till end of June in Hubei province

Gradual recovery starting from March, back to normal by June

  • Off-trade

Significant impact on Traditional and Modern outlets in late January and February

Recovery in March

Travel Retail Asia

  • Reduction in Chinese passenger numbers of c. 2/3 in February and March
  • Gradual recovery starting from April, back to normal by June

FY20 Impact from China + Travel Retail Asia lost Sales:

  • Impact on Group FY20 Sales: c. -2%
  • Priority investments maintained throughout Group, while activating targeted mitigation measures
  • Impact on Group FY20 PRO: c. -3%

Upcoming Communications

DATE¹   EVENT
Tuesday 10 March 2020   North America Conference Call
Thursday 23 April 2020   Q3 FY20 Sales
Tuesday 26 May 2020   Sustainability & Responsibility conference
     
1 The above dates are indicative and are liable to change

 

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