Pernod Ricard has reported that sales for the 2013/14 financial year totalled € 7,945 million, broadly stable excluding Group structure and foreign exchange effects. The reported decline in sales was 7% due to the highly unfavourable foreign exchange effect.
Alexandre Ricard, Deputy CEO & Chief Operating Officer, commented: “In this context which will remain challenging, we anticipate a gradual improvement in our sales growth, and we will increase the investment behind our brands and priority innovations in order to sustain long-term growth.”
Sales were adversely affected by one market, China (-23%):
- Asia-RoW -4%; outside China +5%
- marked improvement in Europe (+2%)
- slowdown of growth in the Americas (+2%) due to the US and Travel Retail
The Top 14 declined 2% as a result of a slight reduction in volumes and unfavourable mix (decline of Martell in China). However, despite a more challenging business environment, pricing remained solid at +2%. The good performance of Key Local Brands (+4%) should be noted, supported by positive pricing. Mix was negative.
As a result of strict control of resources, the operating margin rate increased +52 bps in organic terms, the strongest increase in four years. As a result, profit from recurring operations recorded organic growth of +2% to € 2,056 million.
The foreign exchange impact was highly unfavourable (€-199 million on PRO, as announced). It had a significant impact on the reported change in profit from recurring operations (-8%).
The net financial expense from recurring operations improved by € 98 million due to a very significant reduction in the cost of debt to 4.6% (compared with 5.3% for the 2012/13 financial year).
Group share of net profit from recurring operations decreased by 3%. This decline was lower than the reported decrease in PRO, due to the sharp reduction in financial expenses and the stabilisation of the income tax rate. In organic terms, it grew +9%.
At the end of June, net debt had reduced by € 374 million to € 8.4 billion.