Pernod Ricard Reports 3% Internal Revenue Growth for First Half

The Tip Desk · December 31, 2015 · 2 min read

The spirits maker saw internal revenue rise 3% as growth in the Americas and Asia offset continued difficulties in China.

Pernod Ricard reported consolidated revenue of 4,958 million euros for the first half of the 2015/16 fiscal year, compared to 4,621 million euros in the same period the previous year. On a constant exchange rate and perimeter basis, internal revenue grew 3%.

Growth trajectories varied by region. The Americas saw an acceleration to 4% internal growth, up from 2% in the first half of 2014/15, driven largely by the United States. Europe improved to 1% growth compared to stability in the prior year, with gains primarily in the United Kingdom and Spain. In Asia and the Rest of the World, internal growth reached 5%, supported by double-digit increases in Australia, Africa-Middle East, and India, though the company noted a complicated context in China and difficulties in Korea.

Brand performance contributed to these results, with Jameson growing 11% internally. The company said the United States accounts for nearly a quarter of Jameson revenue. Martell grew 7% internally due to international development, while Scotch whiskies rose 1%. Absolut showed improving underlying trends in the United States, though it declined in Korea and Travel Retail Americas.

Internal growth in the Top 14 category was 2%, supported by a 1% positive price effect from whiskies. The company reported a gross margin rate of 62.1%, a decrease of 25 basis points. This represents a deceleration in margin pressure compared to the 105 basis point decrease seen in the 2014/15 fiscal year. The company attributed a negative mix effect to geographic trends, specifically growth in India and a decline in China.

Current Operating Income rose 3% internally to 1,438 million euros. This result is in line with the company annual target of 1% to 3% internal growth. Net income attributable to the Group rose 12% to 886 million euros.

On the balance sheet, net debt rose by 237 million euros to 9,258 million euros as of December 31, 2015. The company said strong free cash flow from the increase in Current Operating Income and better strategic stock variation was offset by seasonal factors, including the annual dividend payment and a 177 million euro unfavorable exchange effect.

To manage its financing, the company issued a 500 million euro bond on September 28, 2015, with a fixed interest rate of 1.875% and a maturity date of September 28, 2023. As of December 31, 2015, 89% of the company gross debt was at a fixed rate.

Pernod Ricard confirmed its internal Current Operating Income growth target of 1% to 3% for the full 2015/16 fiscal year. The company anticipates a positive exchange rate impact on the full-year Current Operating Income of approximately 20 million euros.