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Regulatory News:

Pernod Ricard (Paris:RI):

Press release - Paris, 8 February 2018

VERY GOOD H1 FY18

+5.1% ORGANIC SALES GROWTH (+0.4% REPORTED)

+5.7% ORGANIC GROWTH IN PRO¹ (-0.3% REPORTED)

+25% NET PROFIT²

VERY STRONG FREE CASH FLOW GROWTH: +21%

UPGRADE OF FY18 GUIDANCE³:

ORGANIC GROWTH IN PRO BETWEEN +4% AND +6%

SALES

Sales for H1 FY18 totalled €5,082m, with organic growth of +5.1% and reported growth of +0.4%, due to negative FX.

Performance accelerated, thanks to the consistent implementation of the medium-term growth roadmap:

• Sustained and diversified growth, with all regions and categories performing well
• improving price / mix
• negative impact of later Chinese New Year⁴ offset by strong Martell demand (high-single digit volume target for full FY18)
• favourable basis of comparison in some geographies (as in Q1.)

All categories were dynamic, each growing +5%:

• Strategic International Brands continued their strong growth, driven in particular by Martell and Jameson
• Strategic Local Brands accelerated thanks to Seagram’s Indian whiskies, Olmeca/Altos and improving trend on Imperial (Korea)
• Strategic Wines accelerated due to Campo Viejo’s momentum
• “Other” improved significantly driven by fast-growing premium brands, in particular Monkey 47, Lillet and Avion.

In terms of geography, the acceleration was driven by Asia, in particular China (despite adverse Chinese New Year phasing), India and Travel Retail Asia

• Americas: continued dynamism +6%
• Asia-Rest of World: acceleration +7% vs. +3% in H1 FY17
• Europe: continued good performance +3%

Q2 Sales were €2,790m, with +4.6% organic growth (-0.8% reported), broadly consistent with underlying trends in Q1.

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¹ PRO: Profit from Recurring Operations

² Reported Group share

³ Guidance given to market on 31 August 2017 of organic PRO growth between +3% and +5%

⁴ Chinese New Year on 16 February 2018 vs. 28 January 2017

RESULTS

H1 FY18 PRO¹ was €1,496m, with organic growth of +5.7% and -0.3% reported, due to USD weakness². For full-year FY18, the FX impact on PRO¹ is estimated at c. -€180m³.

The organic PRO margin was up +21bps, driven by:

• Gross margin ratio: +65bps (partly enhanced by phasing)
  • price impact improving
  • positive mix thanks in particular to Martell, Jameson and Chivas
  • tight management of Cost Of Goods Sold thanks to operational efficiency initiatives, but negative impact of agave cost and Goods & Services Tax in India
• A&P¹: +7%
  • growth ahead of topline in H1 due to phasing and accelerated spend to internationalise Martell
• Structure costs ratio stable.

The H1 FY18 corporate income tax rate on recurring items was c.25% and this rate should carry through for full-year FY18. The USA tax reform is not expected to have a material impact on the corporate income tax rate in future.

Group share of Net PRO¹ was €994m, +4% reported vs. H1 FY17, despite adverse FX, thanks to a reduction in financial expenses. At constant FX, growth was +10%.

Group share of Net profit was €1,147m, +25% reported vs. H1 FY17, due to a reduction in financial expenses and positive non-recurring items (including a one-off sale of bulk Scotch inventory, the reimbursement of the French 3% tax on FY13-17 dividends and a €55m one-off P&L positive net impact further to the reevaluation of deferred tax assets pursuant to the USA tax reform.)

IFRS 15 will be implemented from FY19, leading to the reclassification of certain A&P expenses in deduction of Sales and the integration of the activity of certain third-party bottlers in India into Sales and Cost of Goods Sold. The main proforma estimated impacts are:

• neutral on PRO but PRO margin up c. 70bps
• Sales reduced by c.3%
• Gross Margin down c. 170bps
• A&P / Sales ratio down c. 300bps to c.16%.

FREE CASH FLOW AND DEBT

Free Cash Flow increased very strongly to €799m, +21% vs. H1 FY17, resulting in a Net debt decrease of €476m to €7,375m. The Net Debt/EBITDA ratio at average rates² was down significantly to 2.9x at 31 December 2017.

The average cost of debt reduced to 3.4% vs. 4.0% in H1 FY17. The expected cost for full-year FY18 is c. 3.6%.

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¹PRO: Profit from Recurring Operations; GM: Gross Margin; A&P: Advertising & Promotional expenditure

²EUR/USD average rate of 1.18 in H1 FY18 vs. 1.10 in H1 FY17

³Based on average FX rates projected on 25 January 2018, particularly a EUR/USD rate of 1.25

As part of this communication, Alexandre Ricard, Chairman and Chief Executive Officer, declared,

“H1 FY18 was a very good semester, with an acceleration vs. FY 17, in particular in China, India and Global Travel Retail.

For full-year FY18, we will maintain our focus on digital, innovation and operational excellence (including pricing.) We expect sustained and diversified growth to continue across our regions and brands. We are therefore increasing our guidance for full-year FY18 organic growth in Profit from Recurring Operations to between +4% and +6%¹.”

About Pernod Ricard

Pernod Ricard is the world’s n°2 in wines and spirits with consolidated Sales of €9,010 million in FY17. Created in 1975 by the merger of Ricard and Pernod, the Group has undergone sustained development, based on both organic growth and acquisitions: Seagram (2001), Allied Domecq (2005) and Vin&Sprit (2008). Pernod Ricard holds one of the most prestigious brand portfolios in the sector: 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 employs a workforce of approximately 18,500 people and operates through a decentralised organisation, with 6 “Brand Companies” and 86 “Market Companies” established in each key market. Pernod Ricard is strongly committed to a sustainable development policy and encourages responsible consumption. Pernod Ricard’s strategy and ambition are based on 3 key values that guide its expansion: entrepreneurial spirit, mutual trust and a strong sense of ethics.

Pernod Ricard is listed on Euronext (Ticker: RI; ISIN code: FR0000120693) and is part of the CAC 40 index.

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¹ Guidance given to market on 31 August 2017 of organic PRO growth 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 H1 FY18 Sales and Results can be downloaded from our website: www.pernod-ricard.com

Audit procedures have been carried out on the half-year financial statements. The Statutory Auditors’ report will be issued following their review of the management report.

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

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.

Appendices

Emerging Markets

Strategic International Brands’ organic Sales growth

Sales Analysis by Region

Bulk spirits are allocated by Region according to the Regions’ weight in the Group

Summary Consolidated Income Statement

Profit from Recurring Operations by Region

Bulk spirits are allocated by Region according to the Regions’ weight in the Group

Foreign Exchange Impact

For full-year FY18, a negative FX impact on PRO of c. -€180m is expected¹

Notes

1. Impact on PRO includes strategic hedging on Forex

2. Based on average FX rates for full FY 18 projected on 25 January 2018, particularly EUR/USD = 1.25

Sensitivity of profit and debt to EUR/USD exchange rate

Balance Sheet

Analysis of Working Capital Requirement

Net Debt

Change in Net Debt

Debt Maturity at 31 December 2017

[Missing charts are available on the original document and on www.pernod-ricard.com]

Available cash at end December 2017: €0.9bn in cash and €2.3bn syndicated credit not used (syndicated credit coming to maturity in June 2022)

Gross Debt Hedging at 31 December 2017¹

[Missing charts are available on the original document and on www.pernod-ricard.com]

Natural debt hedging maintained: EUR/USD breakdown close to that of EBITDA

69% of Gross debt at fixed rates

1. includes fair value and net foreign currency asset hedge derivatives

Bond details

Diluted EPS

Upcoming Communications

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