Pernod Ricard Reports Stable Half-Year Operating Profit

The Tip Desk · December 31, 2014 · 2 min read

The wines and spirits maker saw consolidated revenue rise 1% to 4,621 million euros for the first half of the 2014/2015 fiscal year.

Pernod Ricard reported a stable current operating result of 1,358 million euros for the first half of the 2014/2015 fiscal year. Consolidated revenue, excluding duties and taxes, rose 1% to 4,621 million euros from 4,570 million euros in the same period of the previous year. When adjusting for technical effects related to the shift of the Chinese New Year, the company said revenue rose 2%.

Growth was supported by the Top 14 category, specifically whiskies and champagnes. The company noted continued strong performance from Jameson, The Glenlivet, Ballantine’s, Indian whiskies, and the Mumm and Perrier-Jouët champagnes. Martell saw volume increases, though its revenue declined due to an unfavorable mix effect.

Regional performance varied. In Europe, the company reported a 6% internal growth in current operating result, which it attributed to premiumization and the strengthening of Top 14 brands. In the Americas, the current operating result improved 4% internally, driven by strict control of structure costs. The Asia-Rest of World region saw its current operating result fall 7% internally, though the company said this was impacted by the Chinese New Year shift.

Gross margin rates declined from 63.6% to 62.5%. The company attributed this 106 basis point drop to price competition and unfavorable geographic and quality mixes, specifically citing growth in India and a decline in China.

Structure costs fell 3% compared to the first half of the 2013/2014 exercise. The company linked this reduction to the implementation of Allegro and expects total savings from the project to reach 150 million euros.

Net current profit attributable to the Group rose 1% to 834 million euros. This increase was primarily due to an improved current tax rate of 25.3%, compared to 26.1% in the prior-year period. Current free cash flow rose 38% to 492 million euros.

Net debt rose to 9,034 million euros from 8,353 million euros as of June 30, 2014. The company said the increase was mainly due to currency exchange effects, specifically a 517 million euro impact from the euro/US dollar parity moving from 1.37 to 1.21.

Pernod Ricard confirmed its full-year target for internal growth of the current operating result between 1% and 3%. The company anticipates a positive currency exchange impact of 140 million euros on the full-year current operating result.