VERY STRONG FY18:
+6.0% ORGANIC SALES GROWTH (-0.3% REPORTED)
+6.3% ORGANIC GROWTH IN PRO (-1.5% REPORTED)
ORGANIC GROWTH IN PRO BETWEEN +5% AND +7%
Sales for FY18 totalled '8,987m. Organic Sales growth accelerated to +6.0% vs. +3.6% in FY17, thanks to consistent strategy implementation. Reported Sales were down -0.3%.
Sales were very strong, with broad-based growth coming from a wide spectrum of markets'
' Americas: continued dynamism +6%, with USA now growing broadly in line with market and acceleration in Mexico and Brazil
' Asia-Rest of World: acceleration +9%, thanks to return to strong growth in China and India
' Europe: modest growth +2%, with good momentum in Eastern Europe, Germany and UK but difficulties in France and Spain
' Travel Retail in good growth, across all regions, thanks in part to new organisation, leading to value market share gains' and brands:
' Strategic International Brands' acceleration +7% vs. +4% in FY17: 11 out of 13 in growth, 6 improving vs. FY17
' Very strong performance of Martell (+14%) and Jameson (+14%)
' improving trends for overall Scotch portfolio (+3% vs. stable in FY17) and return to growth of Chivas (+5%)
' Absolut +2%, thanks to success outside of USA (+6%) although USA still in decline
' significant improvement of Seagram's Indian whiskies +13% vs. +3% in FY17
' Innovation contributing significantly to topline growth.
Q4 Sales were '1,927m with +5% in organic growth (-2% reported), broadly consistent with underlying trends in the first 9 months of the year.
FY18 PRO was '2,358m, with organic growth of +6.3% and -1.5% reported. The PRO margin was up +14bps organically but down -34bps on a reported basis due to adverse FX (-'180m.)
Organic PRO growth was in line with the revised annual guidance of c. +6%. It was driven by:
' Gross margin +6%, a +15bps margin improvement vs. FY17 on an organic basis, thanks to:
' Pricing improving
' Operational excellence savings limiting impact of cost of goods' increases (in particular Agave cost and GST in India)
' strong growth from Martell and Jameson but negative mix from growth in Seagram's Indian Whiskies and decline of Ricard
' A&P: +7% to prepare for future growth, remaining broadly stable at c. 19% of Sales
' Tight management of Structure costs: +5% (+4% excluding Other income and expense), with targeted investment in Emerging markets and growth relays.
The FY18 corporate income tax rate on recurring items was c. 25%, in line with FY17. The expected rate for FY19 is c. 26%.
Group share of Net PRO1 was '1,511m, +2% reported vs. FY17.
Group share of Net profit was '1,577m, +13% reported vs. FY17, thanks in particular to a reduction in financial expenses.
FREE CASH FLOW AND DEBT
Free Cash Flow was very strong, increasing to '1,433m, +10% vs. FY17, resulting in a Net debt decrease of -'889m to '6,962m.
The average cost of debt reduced to 3.5% vs. 3.8% in FY17. The expected for FY19 is c. 3.9%.
The Net Debt/EBITDA ratio at average rates was 2.6 at 30 June 2018, significantly down from 3.0 at 30 June 2017.
A dividend of '2.36 is proposed for the Annual General Meeting of 21 November 2018, up +17% from FY17, corresponding to an increase in pay-out ratio to 41%, reflecting the Group's policy of gradually increasing cash distribution from approximately one-third of Group Net Profit from Recurring Operations to c. 50% by FY20.
As part of this communication, Alexandre Ricard, Chairman and Chief Executive Officer, declared, 'FY18 was a very strong year. Consistent strategic implementation has enabled us to deliver a significant improvement in business performance while investing for the future. Our Sales have accelerated and diversified, and our margins improved. In FY19, in a still uncertain geopolitical and monetary environment, we will continue consistently implementing our strategy. Our guidance for FY19 is organic growth in Profit from Recurring Operations between +5% and +7%.'
On the same topic
North America Webcast
Thursday 23rd March, 3 pm.
Ann Mukherjee, Chairman and CEO of Pernod Ricard North America and Edward Mayle, Director of Investor Relations, invite you to join a Q&A session on the Pernod Ricard North America business. Held on Thursday 23rd March at 3:00 pm (Paris time).
FY23 EMEA/LATAM Conference Call
Tuesday 22 November 2022, 15.00 CET
Gilles Bogaert, Chairman and Chief Executive Officer of Pernod Ricard EMEA LATAM, and Charly Montet, Investor Relation Manager, have the pleasure to invite you to a Q&A session on the Pernod Ricard EMEA/LATAM business.
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