H1 FY21 Confirms Sustainable Business Strength, with Growth Returning in Must-Win Domestic Markets: USA, China and India

Press Release 11/02/2021



Sales for H1 FY21 totalled '4,985m, with an organic decline of -3.9% (-8.9% reported), with an unfavourable FX impact linked mainly to Euro appreciation vs. USD and Emerging market currencies.
H1 FY21 Sales declined but Q2 improved vs. Q1.  For H1 FY21, the trends were:
'    Americas +2%: good growth in most domestic markets, with particular dynamism in USA (+5%), but significant decline in Travel Retail
'    Asia-RoW -6%: double-digit growth in China (+13%), Turkey, Korea and Pacific, and return to growth in India in Q2: +2% (India H1 -6%), but Covid-related declines in certain Asian markets and Travel Retail
'    Europe -5%: continued very strong growth in Germany, UK, Russia and Poland, more than offset by Covid impact in Spain, France, Ireland and Travel Retail
'    Sales excluding Travel Retail grew +1%.
Strategic International Brands declined due to Travel Retail and On-Trade exposure but Specialty Brands performed very strongly: 
'    Strategic International Brands -6%: solid growth of Malibu, Jameson and The Glenlivet, but overall category impacted by Travel Retail exposure.  Martell and Scotch growing in domestic markets
'    Strategic Local Brands -4%: mainly driven by Seagram's Indian whiskies and Seagram's Gin in Spain
'    Specialty Brands +22%: continued very dynamic development of Lillet, Malfy, Aberlour, American whiskeys (Jefferson's, TX, Rabbit Hole and Smooth Ambler), Avion and Redbreast
'    Strategic Wines +3%: solid growth thanks mainly to Campo Viejo and Brancott Estate.

Pernod Ricard gained or held share in key markets, notably in Europe, despite the On-trade disruption.  Dynamic portfolio management continued, with Innovation in strong growth (+10%.)

Q2 Sales were '2,750m, with -2.4% organic decline, but improving vs. Q1 Sales (-5.6%), thanks in particular to better trends in China and India.


H1 FY21 Profit from Recurring Operations declined -2.4% organically, with an organic margin improvement of +51bps, thanks to dynamic management of resources and favourable phasing:

'    Gross margin contracting -108bps, driven by:

  • Soft pricing, with fewer price increases and on solid comparison basis (H1 FY20 +2% on Strategic Brands, benefiting from FY19 Martell price increases)
  • Adverse mix primarily linked to decline in Travel Retail
  • Higher Cost of Goods mainly from continued agave cost pressures and lower fixed cost absorption, offsetting Operational Excellence initiatives

'    A&P: +132bps, resulting from purpose-based investment, with strong reduction in markets and channels with subdued demand, and favourable phasing (ratio of c. 16% expected for FY21, with strong double-digit increase in H2)    
'    Structure costs: improving +27bps, reflecting dynamic management of resources and FY20 reorganisations
'    Strong negative FX impact on PRO -'155m due to USD and Emerging market currency depreciation vs. Euro.  A significant negative FX impact is also expected for full-year FY21.
The H1 FY21 corporate income tax rate on recurring items was 23.4% vs. 24.2% for H1 FY20, due to a reduction in the French tax rate and geographical mix.
Group share of Net PRO was '1,087m, -11% reported vs. H1 FY20 and the Group share of Net profit '966m, -6% reported, reflecting decline in Profit from Recurring Operations partially offset by lower non-recurring items.
Earnings Per Share were -9%, reflecting decline in PRO and positive impact of FY20 Share buy-back.


Recurring Free Cash Flow was very strong at '995m
. The decline in Profit from Recurring Operations was offset by a significant improvement in operating Working Capital Requirement (inventory normalisation and payables rebuilding vs. June, leading to very strong cash conversion at 79%), a lower increase in strategic inventories and broadly stable capital expenditure.
The average Cost of debt stood at 3.2% vs. 3.7% in H1 FY20, thanks to successful US Dollar bond debt refinancing.

Net debt decreased by '443m vs. 30 June 2020 to '7,980m. The Net Debt/EBITDA ratio at average rates  was 3.4x at 31 December 2020.


Pernod Ricard continued to drive its 2030 Sustainability & Responsibility roadmap, with progress in each of the 4 pillars (Nurturing Terroir, Circular Making, Valuing People and Responsible Hosting.) Significant achievements were attained in particular regarding packaging: all single-use Point-of-Sales plastic will be removed from June 2021.


Alexandre Ricard, Chairman and Chief Executive Officer, stated,  
'We are particularly encouraged by our Must-win domestic markets returning to growth in H1 FY21. The first half confirms the long-term sustainability and underlying strength of our business.
Despite an uncertain and volatile environment, with disruption in the On-trade and a prolonged downturn in Travel Retail, we anticipate organic Sales growth for full-year FY21, thanks in particular to our dynamic performance in domestic Must-win markets USA, China and India.  
We will continue to implement our strategy, in particular accelerating our digital transformation, while dynamically managing resources. Thanks to our solid fundamentals, our teams and our brand portfolio, I am confident that Pernod Ricard will emerge from this crisis stronger.
I would like to take this opportunity to praise our teams, whose engagement and performance are exemplary in these very challenging times, and to express our support to our On-trade and Travel Retail partners who continue to be impacted by the pandemic.'


Julia Massies / VP, Financial Communications & Investor Relations    +33 (0) 1 70 93 17 03
Charly Montet / Investor Relations Manager    +33 (0) 1 70 93 17 13 
Alison Donohoe / Press Relations Manager    +33 (0) 1 70 93 16 23
Emmanuel Vouin / Press Relations Manager    +33 (0) 1 70 93 16 34


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 FY21 Sales and Results can be downloaded from our website: www.pernod-ricard.com 

Limited review procedures have been carried out by the Statutory Auditors on the condensed half-yearly consolidated financial statements. The Statutory Auditors' Review Report on the Half-yearly Financial Information is being issued.

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.


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