PARIS--(BUSINESS WIRE)--

Regulatory News:

Pernod Ricard (Paris:RI):

SALES

Sales for H1 17 totalled €5,061m. Organic Sales growth was +4%, representing a continued improvement vs. FY 16. Reported Sales growth was +2% with an unfavourable FX impact.

The continued improvement, was driven by:

• Strong growth continuing in USA, for Jameson worldwide and innovation
• Improvement vs. FY16 in China, Travel Retail and Russia, as well as for Absolut, Martell and Chivas
• … Despite the temporary adverse impact of demonetisation leading to growth deceleration in India

Sales growth was +3%, restated for earlier CNY¹.

The Group continued to consistently implement its mid-term strategy:

• Following changes, the new organisations are getting up to speed in USA, Global Travel Retail and China
• The brand portfolio is continuing to be actively managed, with the acquisition of a majority stake in Smooth Ambler and the disposal of Domecq brandies and wines
• Innovation is contributing +1% to overall growth, driven by Jameson Caskmates, Lillet and Olmeca Altos

Q2 17 Sales were €2,813m, +4% organic growth, in continuity of Q1. Q2 reported Sales growth was +3%.

RESULTS

H1 17 PRO was €1,500m, with organic growth of +4% (+3% adjusted for CNY¹) and +4% reported:

• Gross margin down -31bps:
  • Price/mix turning positive but pricing remaining subdued
  • Tight management of costings
  • Sustained investment in A&P: +1% to support key initiatives
  • Tightly managed structure costs

¹ Chinese New Year (“CNY”) on 28 January 2017 vs. 8 February 2016

The Operational efficiency implementation is on track with the 2020 roadmap² covering manufacturing, procurement, A&P and supply chain.

Financial expenses from recurring operations were down €16m thanks to the average cost of debt reducing from 4.2% to 4.0% in H1 17. For full-year FY17, the cost of debt is expected to be 3.8%.

The tax rate on recurring operations was 25.7% in H1, close to the c. 26% expected for FY17.

Reported Group share of Net Profit from Recurring Operations was €957m, +5% vs. H1 16.

Reported Group share of Net profit was €914m, +3% vs. H1 16.

FREE CASH FLOW AND DEBT

Cash generation was very strong, with Free Cash Flow of €658m, +34% vs. H1 16, partly enhanced by phasing.

Net debt increased by €237m to €8,953m mainly driven by an adverse translation adjustment on USD-denominated debt (EUR/USD parity on 30 June 2016 at 1.11 vs. 31 December 2016 at 1.05.)

The Net debt / Ebitda ratio at average rates decreased to <3.4, an improvement vs. both 31/12/15 (<3.6) and 30/06/16 (3.4), in spite of adverse cash seasonality.

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

“Our half-year results are strong, delivering a continued performance improvement. Our strategy remains consistent and is driving results.

For full year FY 17, in an uncertain environment, we plan to continue improving our business performance year-on-year vs. FY 16. We will continue to support priority markets, brands and innovations while focusing on operational excellence. We expect to deliver organic growth in Profit from Recurring Operations in line with the guidance of +2% to +4% ³.”

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

Limited audit procedures have been carried out on the half-year financial statements. The Auditors’ report on their limited review is being prepared and will be available on our website.

¹ Initiatives to contribute over the period FY16 to FY20 total P&L savings of c. €200m, of which around half will be reinvested in A&P, and cash savings of c. €200m

² Over the full FY17, the FX impact on PRO is estimated at approximately +€ 80m, based on average FX rates for full FY 17 projected on 31 January 2017 , particularly a EUR/USD rate of 1.09

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.

About Pernod Ricard

Pernod Ricard is the world’s n°2 in wines and spirits with consolidated Sales of € 8,682 million in FY16. 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 and Malibu, Mumm and Perrier- Jouët champagnes, as well Jacob’s Creek, Brancott Estate, Campo Viejo and Kenwood wines. Pernod Ricard employs a workforce of 18,500 people and operates through a decentralised organisation, with 6 “Brand Companies” and 85 “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.

Appendices

House of Brands

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

Emerging Markets

Americas

Asia-Rest of World

Europe

Argentina

Algeria

Malaysia

Albania

Bolivia

Angola

Mongolia

Armenia

Brazil

Cambodia

Morocco

Azerbaijan

Caribbean

Cameroon

Mozambique

Belarus

Chile

China

Namibia

Bosnia

Colombia

Congo

Nigeria

Bulgaria

Costa Rica

Egypt

Persian Gulf

Croatia

Cuba

Ethiopia

Philippines

Georgia

Dominican Republic

Gabon

Senegal

Hungary

Ecuador

Ghana

South Africa

Kazakhstan

Guatemala

India

Sri Lanka

Kosovo

Honduras

Indonesia

Syria

Latvia

Mexico

Iraq

Tanzania

Lithuania

Panama

Ivory Coast

Thailand

Macedonia

Paraguay

Jordan

Tunisia

Moldova

Peru

Kenya

Turkey

Montenegro

Puerto Rico

Laos

Uganda

Poland

Uruguay

Lebanon

Vietnam

Romania

Venezuela

Madagascar

Zambia

Russia

Serbia

Ukraine

Strategic International Brands Organic Growth

				Volumes H1 17								Organic Sales growth H1 17								Volumes								Price/mix
				(in 9Lcs millions)
Absolut				6.2								1%								2%								-1%
Chivas Regal				2.6								-1%								0%								-1%
Ballantine's				3.9								6%								7%								-1%
Ricard				2.5								2%								3%								-1%
Jameson				3.6								20%								16%								4%
Havana Club				2.3								5%								7%								-2%
Malibu				1.8								7%								6%								0%
Beefeater				1.6								5%								4%								1%
Martell				1.3								7%								7%								0%
The Glenlivet				0.6								0%								-1%								1%
Royal Salute				0.1								3%								7%								-4%
Mumm				0.5								3%								4%								-1%
Perrier-Jouët				0.2								9%								5%								4%
Strategic International Brands				27.2								6%								5%								0%

Sales Analysis by Period and Region

Net Sales (€ Million)			Q1 16						Q1 17						Change						Organic Growth						Group Structure						Forex impact
Americas			627		28.2%				649		28.9%				22		3%				52		8%				(7)		-1%				(24)		-4%
Asia / Rest of the World			938		42.2%				917		40.8%				(21)		-2%				1		0%				(0)		0%				(21)		-2%
Europe			658		29.6%				682		30.3%				24		4%				38		6%				5		1%				(19)		-3%
World			2,223		100.0%				2,248		100.0%				24		1%				91		4%				(2)		0%				(64)		-3%
Net Sales (€ Million)			Q2 16						Q2 17						Change						Organic Growth						Group Structure						Forex impact
Americas			742		27.1%				782		27.8%				40		5%				43		6%				1		0%				(4)		-1%
Asia / Rest of the World			1,081		39.5%				1,123		39.9%				43		4%				51		5%				(0)		0%				(8)		-1%
Europe			911		33.3%				907		32.3%				(4)		0%				12		1%				5		1%				(22)		-2%
World			2,734		100.0%				2,813		100.0%				79		3%				107		4%				6		0%				(34)		-1%
Net Sales (€ Million)			H1 16						H1 17						Change						Organic Growth						Group Structure						Forex impact
Americas			1,369		27.6%				1,431		28.3%				62		4%				95		7%				(5)		0%				(28)		-2%
Asia / Rest of the World			2,019		40.7%				2,040		40.3%				22		1%				52		3%				(0)		0%				(30)		-1%
Europe			1,570		31.7%				1,589		31.4%				19		1%				50		3%				10		1%				(41)		-3%
World			4,958		100.0%				5,061		100.0%				103		2%				197		4%				4		0%				(99)		-2%

As of 1 July 2016, Bulk Spirits are allocated by Region according to the Regions’ weight in the Group

Summary Consolidated Income Statement

(€ millions)			12/31/2015				12/31/2016				Change
Net sales			4 958				5 061				2%
Gross Margin after logistics costs			3 078				3 158				3%
Advertising and promotion expenses			(908)				(901)				-1%
Contribution after A&P expenditure			2 170				2 257				4%
Structure costs			(732)				(756)				3%
Profit from recurring operations			1 438				1 500				4%
Financial income/(expense) from recurring operations			(217)				(201)				-7%
Corporate income tax on items from recurring operations			(302)				(334)				11%
Net profit from discontinued operations, non-controlling interests and share of net income from associates			(10)				(9)				-10%
Group share of net profit from recurring operations			909				957				5%
Other operating income & expenses			(35)				(0)				NA
Financial income/(expense) from non-recurring operations			(1)				(4)				NA
Corporate income tax on items from non recurring operations			13				(38)				NA
Group share of net profit			886				914				3%
Non-controlling interests			10				10				-3%
Net profit			896				924				3%

Profit from Recurring Operations by Region

(€ millions)			H1 16						H1 17						Change						Organic Growth						Group Structure						Forex impact
Net sales (Excl. T&D)			4,958		100.0%				5,061		100.0%				103		2%				197		4%				4		0%				(99)		-2%
Gross margin after logistics costs			3,078		62.1%				3,158		62.4%				80		3%				106		3%				3		0%				(29)		-1%
Advertising & promotion			(908)		18.3%				(901)		17.8%				7		-1%				(11)		1%				(1)		0%				18		-2%
Contribution after A&P			2,170		43.8%				2,257		44.6%				87		4%				96		4%				2		0%				(11)		-1%
Profit from recurring operations			1,438		29.0%				1,500		29.6%				63		4%				59		4%				1		0%				3		0%
Americas
(€ millions)			H1 16						H1 17						Change						Organic Growth						Group Structure						Forex impact
Net sales (Excl. T&D)			1,369		100.0%				1,431		100.0%				62		4%				95		7%				(5)		0%				(28)		-2%
Gross margin after logistics costs			890		65.0%				972		68.0%				82		9%				64		7%				0		0%				18		2%
Advertising & promotion			(277)		20.2%				(291)		20.4%				(14)		5%				(19)		7%				(0)		0%				5		-2%
Contribution after A&P			613		44.8%				681		47.6%				68		11%				45		7%				0		0%				23		4%
Profit from recurring operations			400		29.2%				463		32.4%				63		16%				36		9%				0		0%				27		7%
Asia / Rest of the World
(€ millions)			H1 16						H1 17						Change						Organic Growth						Group Structure						Forex impact
Net sales (Excl. T&D)			2,019		100.0%				2,040		100.0%				22		1%				52		3%				(0)		0%				(30)		-1%
Gross margin after logistics costs			1,229		60.9%				1,212		59.4%				(16)		-1%				11		1%				(0)		0%				(27)		-2%
Advertising & promotion			(350)		17.3%				(330)		16.2%				20		-6%				13		-4%				0		0%				7		-2%
Contribution after A&P			879		43.6%				883		43.3%				3		0%				24		3%				(0)		0%				(20)		-2%
Profit from recurring operations			645		31.9%				633		31.0%				(12)		-2%				7		1%				0		0%				(19)		-3%
Europe
(€ millions)			H1 16						H1 17						Change						Organic Growth						Group Structure						Forex impact
Net sales (Excl. T&D)			1,570		100.0%				1,589		100.0%				19		1%				50		3%				10		1%				(41)		-3%
Gross margin after logistics costs			959		61.1%				973		61.2%				15		2%				31		3%				3		0%				(20)		-2%
Advertising & promotion			(281)		17.9%				(280)		17.6%				1		0%				(4)		1%				(1)		0%				6		-2%
Contribution after A&P			677		43.1%				693		43.6%				16		2%				27		4%				2		0%				(14)		-2%
Profit from recurring operations			393		25.0%				405		25.5%				12		3%				16		4%				1		0%				(5)		-1%

As of 1 July 2016, Bulk Spirits are allocated by Region according to the Regions’ weight in the Group

Foreign Exchange Impact

Forex impact H1 17 (€ Million)								Average rates evolution								On Net Sales				On Profit from Recurring Operations 1
								H1 16		H1 17		%
US dollar				USD				1.10		1.10		-0.5%				6				2
Chinese yuan				CNY				7.00		7.41		5.7%				(27)				(19)
Japanese yen				JPY				134.37		116.12		-13.6%				12				7
Argentinian peso				ARS				10.66		16.67		56.4%				(30)				(5)
Pound sterling				GBP				0.72		0.86		19.4%				(49)				7
Other currencies																(11)				11
Total																(99)				3

For full-year FY17, a positive FX impact on PRO of c. €80m is expected²

Notes
1			Impact on PRO includes strategic hedging on Forex
2			based on average FX rates for full FY 17 projected on 31 January 2017, particularly EUR/USD = 1.09

Sensitivity of profit and debt to EUR/USD exchange

Estimated impact of a 1% appreciation of the USD and linked currencies(1) (before hedging)
Impact on the income statement(2)		(€ millions)
Profit from Recurring Operations		+17(3)
Financial expenses		(2)
Pre-tax Profit from Recurring Operations		+15
Impact on the balance sheet		(€ millions)
Increase/(decrease) in Net Debt		+54
(1) CNY, HKD		(2) Full year effect
(3) including +€12M on USD only

Balance Sheet

Assets			6/30/2016				12/31/2016
(€ millions)
(Net amounts)
Non-current assets
Intangible assets and goodwill			17,572				17,953
Tangible assets and other assets			3,233				2,989
Deferred tax assets			2,505				2,527
Total non-current assets			23,310				23,469
Current assets
Inventories			5,294				5,194
Receivables (*)			1,068				1,924
Other current assets			251				232
Tax receivable			92				117
Cash and cash equivalents and current derivatives			577				764
Total current assets			7,282				8,232
Assets held for sale			6				51
Total assets			30,598				31,752
(*) after disposals of receivables of:			520				913
Liabilities and shareholders’ equity			6/30/2016				12/31/2016
(€ millions)
Group Shareholders’ equity			13,337				13,850
Non-controlling interests			169				171
of which profit attributable to non-controlling interests			20				10
Total Shareholders’ equity			13,506				14,021
Non-current provisions and deferred tax liabilities			4,718				4,842
Bonds non-current			7,078				7,260
Non-current financial liabilities and derivative instruments			341				220
Total non-current liabilities			12,137				12,322
Current provisions			167				136
Operating payables			1,688				2,010
Other operating payables			909				709
Tax payable			101				242
Bonds - current			1,884				1,959
Current financial liabilities and derivatives			207				353
Total current liabilities			4,955				5,409
Liabilities held for sale			0				0
Total liabilities and shareholders' equity			30,598				31,752

Analysis of Working Capital Requirement

(€ millions)			June 2015				December 2015				June 2016				December 2016								H1 16 WC change*				H1 17 WC change*
Aged work in progress			4,430				4,416				4,364				4,331								45				8
Advances to suppliers for wine and ageing spirits			8				13				5				16								6				11
Payables on wine and ageing spirits			107				148				109				140								42				31
Net aged work in progress			4,331				4,281				4,260				4,207								9				(12)
Trade receivables before factoring/securitization			1,674				2,571				1,517				2,745								956				1,192
Advances from customers			3				1				2				17								(2)				15
Other receivables			305				312				305				297								12				(3)
Other inventories			847				824				857				784								(3)				(76)
Non-aged work in progress			73				71				73				80								0				7
Trade payables and other			2,208				2,419				2,168				2,521								253				322
Gross operating working capital			689				1,359				582				1,367								715				783
Factoring/Securitization impact			591				861				520				913								(270)				(386)
Net Operating Working Capital			98				497				62				454								445				397
Net Working Capital			4,428				4,778				4,322				4,661								455				385
* without FX effects and reclassifications											Of which recurring variation												459				374
											Of which non recurring variation												(4)				10

Net Debt

(€ millions)			12/31/2015												12/31/2016
			Current				Non-current				Total				Current				Non-current				Total
Bonds			1,390				7,562				8,951				1,959				7,260				9,218
Syndicated loan			0				138				138
Commercial paper			298								298				30								30
Other loans and long-term debts			149				177				325				276				167				443
Other financial liabilities			447				315				761				306				167				473
GROSS FINANCIAL DEBT			1,836				7,876				9,712				2,265				7,427				9,692
Fair value hedge derivatives – assets			(14)				(57)				(72)								(29)				(29)
Fair value hedge derivatives – liabilities																			9				9
Fair value hedge derivatives			(14)				(57)				(72)								(20)				(20)
Net investment hedge derivatives – assets
Net investment hedge derivatives – liabilities
Net investment hedge derivatives
Net asset hedging derivative instruments – assets
Net asset hedging derivative instruments – liabilities			141								141				9								9
Net asset hedging derivative instruments			141								141				9								9
Financial debt after hedging			1,963				7,819				9,782				2,274				7,407				9,681
Cash and cash equivalents			(524)								(524)				(728)								(728)
Net financial debt			1,439				7,819				9,258				1,546				7,407				8,953

Change in Net Debt

(€ millions)			31/12/2015				31/12/2016
Operating profit			1,403				1,500
Depreciation and amortisation			107				106
Net change in impairment of goodwill, PPE and intangible assets			1				4
Net change in provisions			(77)				(75)
Retreatment of contributions to pension plans acquired from Allied Domecq			43				4
Changes in fair value on commercial derivatives and biological assets			4				1
Net (gain)/loss on disposal of assets			(0)				(10)
Share-based payments			15				20
Self-financing capacity before interest and tax			1,495				1,551
Decrease / (increase) in working capital requirements			(455)				(385)
Net interest and tax payments			(391)				(363)
Net acquisitions of non financial assets and others			(159)				(145)
Free Cash Flow			490				658
of which recurring Free Cash Flow			544				741
Net disposal of financial assets and activities, contributions to pension plans acquired from Allied Domecq			(40)				(0)
Dividends paid			(483)				(501)
(Acquisition) / Disposal of treasury shares and others			(28)				(23)
Decrease / (increase) in net debt (before currency translation adjustments)			(60)				134
Foreign currency translation adjustment			(177)				(371)
Decrease / (increase) in net debt (after currency translation adjustments)			(237)				(237)
Initial net debt			(9,021)				(8,716)
Final net debt			(9,258)				(8,953)

Debt Maturity at 31 December 2016

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

• Available cash at end December 2016: €0.7bn in cash and €2.4bn in available credit facilities (syndicated credit coming to maturity in October 2018)

Gross Debt Hedging at 31 December 2016

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

• Large part of Gross debt at fixed rates (81%)
• As of January 2017, the Gross Debt in USD has been reduced to 57% (vs. 62% at 31/12/2016)

Bond Details

Currency

Par value

Coupon

Issue date

Maturity date

EUR

€ 1,000 m

5.000%

3/15/2011

3/15/2017

€ 850 m

2.000%

3/20/2014

6/22/2020

€ 650 m

2.125%

9/29/2014

9/27/2024

€ 500 m

1.875%

9/28/2015

9/28/2023

€ 600 m

1,500%

5/17/2016

5/18/2026

USD

$ 1,000 m

5.750%

4/7/2011

4/7/2021

$ 1,500 m

4.450%

10/25/2011

1/15/2022

$ 2,500 m o/w:

1/12/2012

$ 850 m at 5 years

2.950%

1/15/2017

$ 800 m at 10.5 years

4.250%

7/15/2022

$ 850 m at 30 years

5.500%

1/15/2042

$ 201 m

Libor 6m + spread

1/26/2016

1/26/2021

$ 600 m

3,250%

6/8/2016

6/8/2026

Number of shares used in diluted EPS calculation

(x 1,000)			H1 16				H1 17
Number of shares in issue at end of period			265 422				265 422
Weighted average number of shares in issue (pro rata temporis)			265 422				265 422
Weighted average number of treasury shares (pro rata temporis)			1 490				1 148
Dilutive impact of stock options and performance shares			1 698				1 166
Number of shares used in diluted EPS calculation			265 630				265 440
(€ millions and €/share)			H1 16				H1 17				reported
											∆
Group share of Net Profit from Recurring Operations			909				957				+5%
Diluted net earnings per share from recurring operations			3,42				3,61				+5%

View source version on businesswire.com: http://www.businesswire.com/news/home/20170208006350/en/