Published On 08/31/2017

2016/17 Full-year Sales and Results

Strong FY17: growth acceleration

 +3.6% organic Sales growth (+4% reported)

+3.3% organic growth in PRO[1] (+5% reported)

+13% net profit[2]

Very strong free cash flow growth: +22%

Significant deleveraging: Net debt/Ebitda ratio down -0.4 to 3.0

FY18 guidance:

organic growth in PRO1 between +3% and +5%




Sales for FY17 totalled €9,010m.  Organic Sales growth accelerated vs. FY16, to +3.6%, getting closer to the mid-term objective of +4% to +5%.  Reported Sales growth was +4%.

The acceleration was driven by the Strategic International Brands, +4% vs. stable in FY16:

  • 11 out of 13 brands in growth
  • 9 out of 13 brands improving their performance, with in particular a return to growth for Martell +6% and Absolut +2%

In terms of geography, the improvement was driven by the USA, China (back to growth), Eastern Europe and Global Travel Retail:

  • Americas: acceleration of growth +7%
  • Asia-Rest of World: +1%
  • Europe: +3%

Innovation drove 1/3 of overall topline growth.

The Group continued to actively manage its portfolio:

  • Acquisition of majority stakes in promising premium brands (Smooth Ambler, Del Maguey and Ungava)
  • Disposal of non-core assets (Frïs, Domecq, Glenallachie distillery)

Q4 Sales were €1,962m, +3% in organic growth (+5% reported), broadly consistent with underlying trends in the first 9 months of the year.



FY17 PRO1 was €2,394m, with organic growth of +3.3% and +5% reported. The reported operating margin was up +35bps, thanks to FX (near stable organically.)  For FY18, the FX impact on PRO1 is estimated at c.-€125m[3].


Organic PRO[4] growth was solid and at the higher end of the annual guidance bracket of +2% to +4% despite unexpected regulatory changes in India.  It was driven by:

  • Gross margin +4%, improving vs. FY16 thanks to:
    • Mix turning positive due mainly to Jameson and Martell
    • Muted pricing
    • Tight management of Cost Of Goods Sold thanks to operational efficiency initiatives but some adverse one-offs (Grain Neutral Spirit and agave cost increases…)
  • A&P: +3% with quasi-stability in ratio at c.19% of Sales
  • Tight management of Structure costs: +5% (+3% excluding Other income and expense)

The FY17 corporate income tax rate on recurring items was c.25%, slightly above FY16.  The expected rate for FY18 is c. 26%, subject to possible evolution of tax regulation, in particular in the USA and France.

Group share of Net PRO1 was €1,483m, +7% reported vs. FY16.

Group share of Net profit was €1,393m, +13% reported vs. FY16.



Free Cash Flow increased very significantly to €1,299m, +22% vs. FY16, resulting in a Net debt decrease of €865m to €7,851m.

The average cost of debt reduced to 3.8% vs. 4.1% in FY16.  The expected cost for FY18 is c. 3.8%.

The Net Debt/EBITDA ratio at average rates was 3.0[5] at 30/06/17, significantly down from 3.4 at 30/06/16.



A dividend of €2.02 is proposed for the Annual General Meeting, up 7% from FY16, corresponding to a pay-out ratio of 36%, in line with the customary policy of cash distribution of approximately one-third of Group net profit from recurring operations.


As part of this communication, Alexandre Ricard, Chairman and Chief Executive Officer, declared, “FY17 was a strong year, delivering Profit from Recurring Operations in line with guidance together with an excellent cash performance.  These results demonstrate that the strategic direction the Group adopted 2 years ago is delivering: growth is accelerating and diversifying through successful activation of our strategy.

In FY18, we will continue to implement our roadmap, in particular focusing on digital, innovation and operational excellence.  We are confident that we will continue improving our business performance.  As a consequence, our guidance for FY18 is organic growth in Profit from Recurring Operations between +3% and +5%.”


All growth data specified in this presentation refers to organic growth, unless otherwise stated.  Data may be subject to rounding.

A detailed presentation of FY17 Sales and Results can be downloaded from our website:
Audit procedures have been carried out on the full-year financial statements. The Statutory Auditors’ report will be issued following their review of the management report.


Have a look at the FY17 performance highlights:


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.

Free cash flow

Free cash flow comprises the net cash flow from operating activities excluding the contributions to Allied Domecq pension plans, aggregated with the proceeds from disposals of property, plant and equipment and intangible assets and after deduction of the capital expenditures.

“Recurring” indicators

The following 3 measures represent key indicators for the measurement of the recurring performance of the business, excluding significant items that, because of their nature and their unusual occurrence, cannot be considered as inherent to the recurring performance of the Group:

  • Recurring free cash flow

Recurring free cash flow is calculated by restating free cash flow from non-recurring items.

  • Profit from recurring operations

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

  • Group share of net profit from recurring operations

Group share of net profit from recurring operations corresponds to the Group share of net profit excluding other non-current operating income and expenses, non-recurring financial items and corporate income tax on non-recurring items.

Net debt

Net debt, as defined and used by the Group, corresponds to total gross debt (translated at the closing rate), including fair value and net foreign currency assets hedging derivatives (hedging of net investments and similar), less cash and cash equivalents.


EBITDA stands for “earnings before interest, taxes, depreciation and amortization”. EBITDA is an accounting measure calculated using the Group's profit from recurring operations excluding depreciation and amortization on operating fixed assets.

[1] PRO: Profit from Recurring Operations

[2] Reported Group share

[3] Based on average FX rates projected on 22 August 2017, particularly a EUR/USD rate of 1.18

[4] PRO: Profit from Recurring Operations

[5] Average EUR/USD rate of 1.09 in FY17 vs. 1.11 for FY16

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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 160+ markets and by its own 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 the beverage sector in Vigeo Eiris. 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.

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