Exhibit 99.1
PRESS RELEASE
Paris, France | March 23, 2006 |
Pernod Ricard: 1st half year 2005/2006
| • | Profit from operations: € 767 million (+70%) |
| • | Net current profit: €471 million (+58%) |
| • | Net current profit per share: + 26% (5.34 euros) |
| • | Group share in net profit: € 488 million (+51%) |
The Board of Directors of Pernod Ricard, meeting on 22 March 2006 under the chairmanship of Patrick Ricard approved the IFRS financial statements for the first half year and indicated the outlook for the full year 2005/2006.
In respect of the first half 2005/2006 (1 July to 31 December 2005), Pernod Ricard recorded strong growth in results due to the dynamism of its original premium brands and a rapid and successful integration of Allied Domecq.
Profit from operations
Consolidated sales (excl. taxes and duties) grew by 66.7% to € 3,268 million.
Pernod Ricard original brands strong growth
Pernod Ricard original premium brands continued their spectacular growth (Chivas +13 %; Jameson +12 %; The Glenlivet +10 %; Martell +9 %) and were the major feature of 4.5% organic growth in sales. The strong profitability of these brands generated a sharp rise in the gross margin from 60.1 % to 61.3 %. Their higher profitability supported a sustained advertising and promotion effort for our key brands (+ 11 % in the period). Overall, the contribution after advertising and promotion of the original brands was € 815 million, thus confirming their dynamism with organic growth of 5%.
Successful integration of Allied Domecq brands and profitability in line with expectations
The contribution generated by the Allied Domecq brands, from this first half year period of 5 months, is in line with our expectations (€ 486 million contribution after advertising and promotion) and reflects a comparable level of profitability to that of the Pernod Ricard original brands (rate of brand contribution to sales of 39.2% vs 40.2% for Pernod Ricard original brands). This good performance was achieved against a background of integration and cleaning up certain markets (destocking, cessation of parallel sales).
The rapid implementation of the integration and the cost synergies generated from this half year has enabled a cost saving equivalent to 40% of the final objective. Structure costs were thus € 534 million equivalent to 16.3% of sales compared to 17% for the same period of the previous year. This, together with the good profitability of the new portfolio, led to strong growth of 70% in profit from operations to € 767 million and an immediate improvement in the operating margin of Pernod Ricard which increased from 23 to 23.5%.
All regions reported growth in profit from operations however, the Americas led the way and achieved a doubling of profit. Organic growth for the period was particularly strong in Asia/Rest of the World, with an increase of 14.6% in the contribution after advertising and promotion. The results of this half year highlight the successful internationalisation of Pernod Ricard that now achieves more than 50% of its profits from the high growth regions of Asia and the Americas.
Other elements of Net Current Profit
Current finance costs were (€ 177) million reflecting an average interest rate of around 4.5% (€ 164 million of finance charges) as well as the amortisation of bank commissions for the funding arrangement (€ 12 million) and the interest cost related to retirement commitments (€ 7 million).
At 31 December 2005, the IFRS debt of Pernod Ricard was € 8,774 million, a reduction of more than one billion euros since the Allied Domecq acquisition on 26 July, due to the free cash flow from operations of € 312 million, the conversion of the Oceane into Pernod Ricard shares and various asset disposals (Bushmills).
The sale of Dunkin Brands and Glen Grant in the 1st quarter of 2006 for around € 1.5 billion, net of tax, should further accelerate the debt reduction in the second half year.
The tax charge on ordinary activities was € 148 million representing an average rate of 25% in line with expectations.
Finally, assets sold (Dunkin Brands, Britvic) generated a profit of € 42 million in the half year, and minority interests accounted for € 14 million. Overall, the net current profit of € 471 million was up by 58% compared to the position at 31 December 2004.
Net current profit per share, benefiting from the seasonality of our profits grew strongly by 26% compared to the first half of 2004/2005 to amount to € 5.34.
Non-current elements
The loss from non-current activities of (€ 7) million was close to breakeven. Gains from asset disposals (Bushmills, Seagram’s vodka, etc.) largely offset the restructuring costs incurred in the half year (€ 174 million) and various non-recurring charges relating to the Allied Domecq transaction (€ 78 million) (various fees, IT costs...).
In addition, various non-current finance costs of (€ 66) million committed as part of the Allied Domecq acquisition were incurred in the period (cost of conversion of Oceane, net cost of exchange options).
Most of the non-current charges led to a tax saving whereas most disposals attracted no tax. The non-current elements thus generated a tax saving of € 90 million.
Overall, after inclusion of the non-current elements, the group share in net profit for the first half of 2005/2006 was € 488 million, a 51% increase over the previous year.
Conclusion and outlook
The quality of the results for the first half of 2005/2006 highlights the speed and success of the integration process of Allied Domecq. It also demonstrates the continued dynamism of Pernod Ricard original premium brands.
Commenting on these good results, Patrick Ricard stated: “These good figures inspire confidence for the full year and enable us to envisage currently a top of the range growth of 10 to 15% in Earnings Per Share.”
For more information, please contact: |
|
Francisco de la VEGA, Communications VP, | Tel: +33 (0)1 41 00 40 96 |
Patrick de BORREDON, Investor Relations VP, | Tel: +33 (0)1 41 00 41 71 |
Florence TARON, Press Relations Manager, | Tel: +33 (0)1 41 00 40 88 |
or visit our web site at www.pernod-ricard.com |
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INCOME STATEMENT
In millions of euros | 31.12.2005 | 31.12.2004 |
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6-month period |
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Net sales (excl. TD) | 3,267.9 | 1,960.6 |
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Cost of sales | (1,322.5) | (782.5) |
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Gross margin | 1,945.4 | 1,178.1 |
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A&P and distribution costs | (644.0) | (393.4) |
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Contribution after AP expenses | 1,301.4 | 784.7 |
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Trading costs and overheads | (534.4) | (333.2) |
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Profit from operations | 767.0 | 451.5 |
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Other operating income and expenses | (7.1) | 35.1 |
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Operating profit | 759.9 | 486.6 |
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Current financial income & expenses | (176.7) | (42.5) |
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Non-current financial income & expenses | (65.8) |
|
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Income tax expense | (57.6) | (116.1) |
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Net profit from continuing operations | 459.7 | 328.0 |
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Share of net profit/(loss) of associates | 0.9 | (0.1) |
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Net profit before discontinued operations | 460.6 | 327.9 |
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Net profit from discontinued operations | 41.8 |
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Net profit | 502.4 | 327.9 |
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Profit attributable to minority interests | (14.2) | (4.4) |
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Group share of net profit | 488.2 | 323.4 |
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CASH FLOW STATEMENT
| 6 months | 6 months |
|
In millions of euros |
| ||
Operating profit | 760 | 487 |
|
Fixed assets depreciation | 71 | 55 |
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Changes in provisions | 80 | (15) |
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Goodwill impairment | (0) | 9 |
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Increase/(decrease) in operating derivatives | (8) | (4) |
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Fair value adjustment on biological assets & investments | 0 | 1 |
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Net (gain) / loss on disposal assets | (248) | (57) |
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Stock options impact | 10 | 6 |
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Net cash provided by operating activities before changes in working capital | 665 | 481 |
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(Increase) in working capital | (103) | (137) |
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Net cash from operating activities | 562 | 344 |
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Financial Expenses (Paid) / Received | (133) | (30) |
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Income Tax Paid | (105) | (79) |
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Acquisition of fixed assets | 3 | (43) |
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Changes in receivables and payables related to fixed assets | (16) | 11 |
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Free Cash Flow | 312 | 203 |
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Acquisitions and proceeds from sales of financial assets | 285 | 60 |
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Changes in consolidation scope | (7,543) | 25 |
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Dividends paid | (100) | (1) |
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Variations in capital and other shareholders’ equity accounts | 505 | 0 |
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Changes in treasury shares | 8 | (150) |
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Decrease (increase) in debt (before currency translation adjustments) | (6,533) | 137 |
|
Currency translation adjustments | (96) | 78 |
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Decrease (increase) in debt (after currency translation adjustments) | (6,629) | 215 |
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Net debt at beginning of year | (2,145) | (2,207) |
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Net debt at end of year | (8,774) | (1,992) |
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BALANCE SHEET
ASSETS
In millions of euros | 31.12.2005 |
| 30.06.2005 |
| ||
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|
| Gross | Depreciation | Net |
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Non current assets |
|
|
|
|
|
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Intangible assets | 8,315 | (107) | 8,207 |
| 1,993 |
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Goodwill | 3,988 | (242) | 3,746 |
| 217 |
|
Intangible assets & goodwill | 12,302 | (349) | 11,953 |
| 2,210 |
|
Property, plant and equipment | 3,099 | (1,480) | 1,619 |
| 853 |
|
Biological assets | 113 | (3) | 110 |
| 19 |
|
Financial assets | 656 | (423) | 233 |
| 79 |
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Deferred tax assets | 789 | 0 | 789 |
| 354 |
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Total non current assets | 16,959 | (2,255) | 14,704 |
| 3,515 |
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Current assets |
|
|
|
|
|
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Inventories | 3,376 | (67) | 3,309 |
| 2,179 |
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Trade and other receivables | 3,079 | (141) | 2,938 |
| 855 |
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Other financial assets | 227 | (15) | 212 |
| 323 |
|
Cash & cash equivalents | 1,046 | 0 | 1,046 |
| 135 |
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Total current assets | 7,728 | (223) | 7,506 |
| 3,493 |
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Discontinued operations | 5,194 | 0 | 5,194 |
| 0 |
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|
|
|
|
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Total assets | 29,882 | (2,478) | 27,404 |
| 7,007 |
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EQUITY AND LIABILITIES
In millions of euro | 31.12.2005 |
| 30.06.2005 |
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Shareholders’ equity |
|
|
|
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Share capital | 291 |
| 219 |
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Share premium account | 2,521 |
| 38 |
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Reserves and translation currency adjustments | 2,431 |
| 1,789 |
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Group share of net profit | 488 |
| 484 |
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Group shareholders’ equity | 5,730 |
| 2,530 |
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Minority interest | 168 |
| 35 |
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Profit attributable to minority interests | 14 |
| 9 |
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Total shareholders’ equity | 5,898 |
| 2,565 |
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Non-current provisions | 1,644 |
| 367 |
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Deferred tax liabilities | 3,242 |
| 551 |
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Convertible bonds | 2,660 |
| 502 |
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Non-current derivative instruments | 7 |
| (2) |
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Other non-current financial liabilities | 4,081 |
| 509 |
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Non-current financial liabilities | 6,748 |
| 1,009 |
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Total non-current liabilities | 11,634 |
| 1,927 |
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Current liabilities |
|
|
|
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Provisions | 413 |
| 121 |
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Trade & other accounts payables | 3,273 |
| 934 |
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Other liabilities | 310 |
| 177 |
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Other current financial liabilities | 3,073 |
| 1,270 |
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Tracker shares | 2,777 |
| 0 |
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Current derivative instruments | 25 |
| 13 |
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Current financial liabilities | 5,875 |
| 1,283 |
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Total current liabilities | 9,872 |
| 2,514 |
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Total liabilities and shareholders’ equity | 27,404 |
| 7,007 |
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INCOME STATEMENT BY GEOGRAPHICAL AREA
(M€)
France | 31.12.04 | 31.12.05 | 2005/2004 | Organic | ||||
Net sales (excl. TD) | 294 | 100% | 357 | 100.0% | 63 | 21.4% | (4) | -1.2% |
Gross margin | 212 | 72.2% | 257 | 72.1% | 45 | 21.3% | (5) | -2.2% |
Contribution after AP expenses | 139 | 47.5% | 160 | 44.9% | 21 | 14.9% | (5) | -3.5% |
Profit from operations | 61 | 20.9% | 70 | 19.5% | 8 | 13.3% |
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Europe | 31.12.04 | 31.12.05 | 2005/2004 | Organic | ||||
Net sales (excl. TD) | 756 | 100.0% | 1,136 | 100.0% | 381 | 50.4% | 1 | 0.2% |
Gross margin | 464 | 61.5% | 684 | 60.2% | 220 | 47.4% | 9 | 2.1% |
Contribution after AP expenses | 320 | 42.4% | 487 | 42.9% | 167 | 52.1% | 14 | 4.5% |
Profit from operations | 184 | 24.3% | 291 | 25.6% | 107 | 58.4% |
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Americas | 31.12.04 | 31.12.05 | 2005/2004 | Organic | ||||
Net sales (excl. TD) | 412 | 100.0% | 895 | 100.0% | 483 | 117.4% | 22 | 5.5% |
Gross margin | 255 | 61.9% | 561 | 62.7% | 306 | 120.1% | 14 | 5.6% |
Contribution after AP expenses | 173 | 42.0% | 388 | 43.4% | 215 | 124.6% | 7 | 4.5% |
Profit from operations | 106 | 25.7% | 248 | 27.7% | 142 | 134.3% |
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Asia / Rest of the world | 31.12.04 | 31.12.05 | 2005/2004 | Organic | ||||
Net sales (excl. TD) | 500 | 100.0% | 881 | 100.0% | 381 | 76.1% | 65 | 13.1% |
Gross margin | 248 | 49.5% | 444 | 50.4% | 196 | 79.1% | 55 | 22.2% |
Contribution after AP expenses | 153 | 30.5% | 266 | 30.2% | 113 | 74.2% | 22 | 14.6% |
Profit from operations | 101 | 20.2% | 159 | 18.0% | 58 | 57.3% |
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World | 31.12.04 | 31.12.05 | Variation | Croissance Interne | ||||
Net sales (excl. TD) | 1,961 | 100.0% | 3,268 | 100.0% | 1,307 | 66.7% | 85 | 4.5% |
Gross margin | 1,178 | 60.1% | 1,945 | 59.5% | 767 | 65.1% | 73 | 6.4% |
Contribution after AP expenses | 785 | 40.0% | 1,301 | 39.8% | 517 | 65.8% | 38 | 5.0% |
Profit from operations | 452 | 23.0% | 767 | 23.5% | 315 | 69.8% |
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