Press releases
08/03/2007 : Strong sales and profit margin growth in the 2006/2007 1st half-year
• Operating profit from ordinary activities: up € 886 million (+20%*)
• Net profit from ordinary activities: up € 529 million (+18%**)
Press release - Paris, 8 March 2007
The Board of Directors of Pernod Ricard, meeting on 7 March 2007 under the chairmanship of Patrick Ricard approved the IFRS financial statements for the first half year and outlined prospects for the 2006/2007 full year.
In respect of the 2006/2007 first half (1 July to 31 December 2006), Pernod Ricard recorded very strong growth in results due to vigorous sales by all portfolio brands, especially premium brands, as well as the implementation of synergies derived from the Allied Domecq acquisition in July 2005.
2006/2007 interim sales
2006/2007 1st half-year consolidated sales (excl. taxes and duties) grew by 7.3% to € 3,507 million, being 9.7% organic growth (negative foreign exchange impact of 2.7%, positive Group structure impact of 0.7%).
This outstanding performance was made possible by the powerful Pernod Ricard network and the quality of its portfolio recently enhanced by the brands originating from the Allied Domecq acquisition.
The Group’s 15 strategic brands were the ones experiencing the fastest growth (organic growth of 9% in volume and 14% in value), with an even more vigorous growth for the super and ultra premium segments: Chivas 18 years old, Ballantine’s 17 - 21 - 30 years old, Royal Salute, The Glenlivet, Martell (Cordon Bleu and XO) and Perrier-Jouët Belle Epoque.
All regions contributed to the increase in consolidated sales, with a marked acceleration in the second quarter and the increased scale of emerging countries.
Operating profit from ordinary activities
The rapid implementation of integration enabled the Group to achieve the full cost synergy objective, with € 135 million over the 2006/2007 1st half-year or € 270 million over the full financial year. Structure costs thus amounted to € 516 million (14.7% of sales, compared to 16.3% over the same period of the previous financial year). This performance, combined with vigorous sales generated a very strong increase in operating profit from ordinary activities (+20%* to € 886 million) and a further sharp improvement in Pernod Ricard’s operating margin, which rose to 25.3% from 23.5%.
All regions contributed to this growth in operating profit from ordinary activities, with a marked improvement both in Europe and in France and the confirmed strong dynamism of the Americas and Asia/Rest of World regions. The continuing success of Pernod Ricard’s internationalisation, with 53% of profits achieved from these high growth regions (Americas and Asia/Rest of World), is thus confirmed in spite of the decrease in value of the US dollar.
The unfavourable foreign exchange movement (primarily USD and currencies tied to USD) reduced growth in operating profit from ordinary activities by € 40 million.
Net Profit from Ordinary Activities
Financial expense from ordinary activities totalled € 173 million, comprising € 165 million of finance charges (average borrowing cost of about 5% compared to an initial guidance of 4.5%), as well as the amortisation of bank commissions for the funding arrangement for € 7 million.
At 31 December 2006, Pernod Ricard’s debt was € 6,803 million, a € 452 million increase, due to the payment of a € 545 million tax liability upon the disposal of Dunkin’Brands carried out during the previous financial year. Excluding this tax payment, debt decreased by € 93 million over the 1st half of the current financial year, after the payment of the € 228 million cash dividend. This debt takes into account a high level of trade receivables at 31 December 2006, due to sales seasonal fluctuations: their collection at the beginning of this year will enable the Group to reduce net debt in the 2nd half-year.
The tax charge on ordinary activities was € 170 million, representing an average rate of 23.9% in line with expectations. The lack of contribution to the half-year profits from operations sold should also be noted (€ 42 million in the 2005/2006 1st half-year). Finally minority interests remained stable from one financial year to the other at € 14 million.
Net profit from ordinary activities recorded an outstanding 18% growth on a constant exchange rate basis to € 529 million, compared to the 2005/2006 1st half-year, despite the disposal of Dunkin’Brands.
Other items
Loss from other operating income and expenses was close to breakeven at € 21 million. Gains from asset disposals of € 11 million (Rich & Rare, Canadian Club…) partly offset other charges incurred in the half year, primarily related to the Allied Domecq integration. In addition, other financial items totalled € 5 million and the tax charge on other items was € 13 million. In total, other items thus represent € 29 million charge, compared to € 17 million profit in the first half of the previous year.
Therefore, after inclusion of other items, net profit - Group share for the first half of 2006/2007 was € 500 million, a 2.3% increase over the previous year.
Conclusion and outlook
Commenting on these good results, Patrick Ricard stated: “I am very pleased with our excellent performance over the 1st half of the 2006/2007 financial year, which reflects the complete success of our strategy and the fulfilment of all the objectives we had set ourselves upon the acquisition of Allied Domecq. In view of these outstanding results and the strong sales figures observed in January and February, we expect 20% growth in net profit from ordinary activities (Group share), excluding foreign exchange impact, for the full 2006/2007 financial year, if current business conditions remain unchanged”.
* Organic growth, measured from August to December for Allied Domecq brands and over 6 months for Pernod Ricard original brands ** Measured on a constant foreign exchange basis
Pernod Ricard contacts
Francisco de la VEGA / Communication VP Tel: +33 (0)1 41 00 40 96
Denis FIEVET/ Financial Communication & Investor Relations VP Tel: +33 (0)1 41 00 41 71
Patrick de BORREDON/ Investor Relations Advisor Tel: +33 (0)1 41 00 41 71
Florence TARON / Press Relations Manager Tel: +33 (0)1 41 00 40 88
• Net profit from ordinary activities: up € 529 million (+18%**)
Press release - Paris, 8 March 2007
The Board of Directors of Pernod Ricard, meeting on 7 March 2007 under the chairmanship of Patrick Ricard approved the IFRS financial statements for the first half year and outlined prospects for the 2006/2007 full year.
In respect of the 2006/2007 first half (1 July to 31 December 2006), Pernod Ricard recorded very strong growth in results due to vigorous sales by all portfolio brands, especially premium brands, as well as the implementation of synergies derived from the Allied Domecq acquisition in July 2005.
2006/2007 interim sales
2006/2007 1st half-year consolidated sales (excl. taxes and duties) grew by 7.3% to € 3,507 million, being 9.7% organic growth (negative foreign exchange impact of 2.7%, positive Group structure impact of 0.7%).
This outstanding performance was made possible by the powerful Pernod Ricard network and the quality of its portfolio recently enhanced by the brands originating from the Allied Domecq acquisition.
The Group’s 15 strategic brands were the ones experiencing the fastest growth (organic growth of 9% in volume and 14% in value), with an even more vigorous growth for the super and ultra premium segments: Chivas 18 years old, Ballantine’s 17 - 21 - 30 years old, Royal Salute, The Glenlivet, Martell (Cordon Bleu and XO) and Perrier-Jouët Belle Epoque.
All regions contributed to the increase in consolidated sales, with a marked acceleration in the second quarter and the increased scale of emerging countries.
Operating profit from ordinary activities
The rapid implementation of integration enabled the Group to achieve the full cost synergy objective, with € 135 million over the 2006/2007 1st half-year or € 270 million over the full financial year. Structure costs thus amounted to € 516 million (14.7% of sales, compared to 16.3% over the same period of the previous financial year). This performance, combined with vigorous sales generated a very strong increase in operating profit from ordinary activities (+20%* to € 886 million) and a further sharp improvement in Pernod Ricard’s operating margin, which rose to 25.3% from 23.5%.
All regions contributed to this growth in operating profit from ordinary activities, with a marked improvement both in Europe and in France and the confirmed strong dynamism of the Americas and Asia/Rest of World regions. The continuing success of Pernod Ricard’s internationalisation, with 53% of profits achieved from these high growth regions (Americas and Asia/Rest of World), is thus confirmed in spite of the decrease in value of the US dollar.
The unfavourable foreign exchange movement (primarily USD and currencies tied to USD) reduced growth in operating profit from ordinary activities by € 40 million.
Net Profit from Ordinary Activities
Financial expense from ordinary activities totalled € 173 million, comprising € 165 million of finance charges (average borrowing cost of about 5% compared to an initial guidance of 4.5%), as well as the amortisation of bank commissions for the funding arrangement for € 7 million.
At 31 December 2006, Pernod Ricard’s debt was € 6,803 million, a € 452 million increase, due to the payment of a € 545 million tax liability upon the disposal of Dunkin’Brands carried out during the previous financial year. Excluding this tax payment, debt decreased by € 93 million over the 1st half of the current financial year, after the payment of the € 228 million cash dividend. This debt takes into account a high level of trade receivables at 31 December 2006, due to sales seasonal fluctuations: their collection at the beginning of this year will enable the Group to reduce net debt in the 2nd half-year.
The tax charge on ordinary activities was € 170 million, representing an average rate of 23.9% in line with expectations. The lack of contribution to the half-year profits from operations sold should also be noted (€ 42 million in the 2005/2006 1st half-year). Finally minority interests remained stable from one financial year to the other at € 14 million.
Net profit from ordinary activities recorded an outstanding 18% growth on a constant exchange rate basis to € 529 million, compared to the 2005/2006 1st half-year, despite the disposal of Dunkin’Brands.
Other items
Loss from other operating income and expenses was close to breakeven at € 21 million. Gains from asset disposals of € 11 million (Rich & Rare, Canadian Club…) partly offset other charges incurred in the half year, primarily related to the Allied Domecq integration. In addition, other financial items totalled € 5 million and the tax charge on other items was € 13 million. In total, other items thus represent € 29 million charge, compared to € 17 million profit in the first half of the previous year.
Therefore, after inclusion of other items, net profit - Group share for the first half of 2006/2007 was € 500 million, a 2.3% increase over the previous year.
Conclusion and outlook
Commenting on these good results, Patrick Ricard stated: “I am very pleased with our excellent performance over the 1st half of the 2006/2007 financial year, which reflects the complete success of our strategy and the fulfilment of all the objectives we had set ourselves upon the acquisition of Allied Domecq. In view of these outstanding results and the strong sales figures observed in January and February, we expect 20% growth in net profit from ordinary activities (Group share), excluding foreign exchange impact, for the full 2006/2007 financial year, if current business conditions remain unchanged”.
* Organic growth, measured from August to December for Allied Domecq brands and over 6 months for Pernod Ricard original brands ** Measured on a constant foreign exchange basis
- Access the appendices (pdf)
Pernod Ricard contacts
Francisco de la VEGA / Communication VP Tel: +33 (0)1 41 00 40 96
Denis FIEVET/ Financial Communication & Investor Relations VP Tel: +33 (0)1 41 00 41 71
Patrick de BORREDON/ Investor Relations Advisor Tel: +33 (0)1 41 00 41 71
Florence TARON / Press Relations Manager Tel: +33 (0)1 41 00 40 88
