Robust Performance, Pernod Ricard Steering Through Spirits Market Normalization - Seite 2

• Strategic International Brands -4%: good growth of Royal Salute, Havana Club and Perrier-Jouët offset by decline of Martell, Jameson, Chivas Regal and Ballantine’s due to exposure to China, USA and LATAM. Jameson continuing its international expansion, Absolut in dynamic growth in Asia-RoW and Europe
• Strategic Local Brands +4%: growth across Seagram’s Indian whiskies portfolio and Kahlua in many markets
• Specialty Brands -5%: solid performance of Altos, Italicus, Ki No Bi. Category impacted by overall exposure to US market normalization and inventory adjustment
• Strategic Wines -11%: decline notably in USA, UK and Canada.

Premium portfolio driving high-single digit pricing in all regions, with lower volumes and adverse market mix. Holding or gaining share in many markets.

RESULTS

H1 FY24 PRO reached €2,144m, an organic decline of -3%, sustaining organic operating margin (+7 bps):

• Strong Gross Margin expanding significantly +126 bps:
  • Superior Revenue Growth Management and focus on operating costs efficiencies,
  • Offsetting easing inflation on Costs of Goods and adverse market mix
• Strong portfolio activation with A&P at c. €1bn
• Very strict discipline on Structure costs

H1 FY24 reported Operating margin was down -152 bps with an overall negative FX impact on PRO of €(311)m mainly from Turkish lira, US dollar, Chinese yuan and Argentinean peso, partly offset by a positive perimeter effect of +€100m.

Group share of Net PRO was €1,439m, -17% reported vs. H1 FY23 and the Group share of Net Profit was €1,569m, -12% reported, mainly reflecting lower PRO and non-recurring operating income, driven mainly by asset disposal.

Earnings Per Share in decline at €5.68, reflecting softer PRO and increase of recurring financial expenses with an average cost of debt at 3.1%, following significant increase of interest rates.

FREE CASH FLOW AND DEBT

Free Cash Flow at c. €301m, -68% vs H1 FY23, driven by lower reported profit and acceleration of our planned strategic investments to fuel future growth.

Net debt up €1,110m vs. 30 June 2023 to €11,383m. The Net Debt/EBITDA ratio at average rate³ increased to 3.3x at 31 December 2023 reflecting lower year on year Reported PRO and higher Net Debt.

OUTLOOK

Building on a very strong FY23 and a robust performance in H1 FY24, we are confident in our medium-term financial framework of +4% to +7% top line growth, aiming for the upper end of the range, with Organic Operating leverage of +50/+60 bps.