Pernod Ricard Sales Up 2.3%

Meanwhile Pernod Ricard has announced the completion of the acquisition of V&S Vin & Sprit AB (“V&S”). This follows the decision by the European Commission on 17 July 2008 to authorise Pernod Ricard to acquire 100% of the shares in V&S.

24/07/08 Pernod Ricard sales increased by 2.3% to € 6,589 million (excluding tax and duties) for the 2007/08 financial year ended 30 June 2008.  This performance was the result of an outstanding 8.7% organic growth, a strong foreign exchange impact (-4.6%) primarily due to the depreciation of the US dollar and a -1.6% Group structure impact. 

Growth of the 15 strategic brands was very strong: +11% in value and +5% in volume, perfectly illustrating the premiumisation strategy of the Group, enhanced by the quality of its portfolio of brands and by the power of its distribution network, in particular in emerging countries.  Ten of these brands reported double-digit growth* rates: Martell (+24%), Jameson (+21%), Mumm (+18%), Havana Club (+17%), The Glenlivet (+14%), Perrier Jouët (+14%), Stolichnaya (+12%), Chivas (+11%), Ballantine’s (+11%) and Malibu (+10%). 

Over the full financial year, the spirits business grew in value by +9%*.  The wine business grew by +6%*, compared to +1%* in the previous financial year, thereby confirming its recovery and significant development potential.

Overall, HY2 growth* (+7%) remained strong following a very good HY1 (+10%), against a background of further appreciation of the Euro against most other currencies.

Fourth quarter consolidated sales totalled € 1,498 million, down 3%, being +7% organic growth (foreign exchange impact -8%, Group structure impact -2%).  This strong organic growth, achieved in spite of the Sichuan earthquake, the impact of which reduced quarter growth by about 1%, testifies to the continuing strong dynamism in emerging markets and the good performance of western markets.

The year 2007/08 was also marked by the acquisition of the Vin & Sprit Group, owner of the ABSOLUT brand. The transaction closed on 23 July 2008. ABSOLUT (world leader in premium vodkas) records excellent performances, illustrated by its accelerated growth in the first half of 2008 (+12% compared to +9% in the calendar year 2007) and a volume of 11.3 million 9-litre cases sold over the 12 months period ending 30 June 2008 (+600,000 9-litre cases compared to calendar year 2007). This demonstrates the tremendous commercial and financial prospects linked to the integration of this brand within the Group’s portfolio. Pernod Ricard is moreover confident in achieving the top end of the range of cost synergies announced (€ 125 to 150 million). The resulting cash generation, together with a programme of asset disposals valued at about € 1 billion over the coming 12 to 18 months, will allow for a rapid reduction of the Group’s indebtedness.

The vigour of sales and the highly favourable effects of improved pricing and portfolio premiumisation lead us to anticipate strong growth in our operating profit margin and enable the company once again to revise upwards their guidance for growth in operating profit from ordinary activities to about +13%, on a like-for-like basis*, for the 2007/08 financial year. 

According to Patrick Ricard, Chairman and CEO of Pernod Ricard: “the year 2007/08 demonstrates our significant growth potential in all emerging markets and the sound basis of our business in western markets.  The quality of our portfolio of brands and the power of our distribution network, enable us to start the 2008/09 year with confidence, and to expect very strong growth in emerging markets and moderate growth in western markets. This development, together with the significant opportunities offered to the Group by the Vin & Sprit acquisition, enables us to anticipate a continuation of improving margins and strong organic growth of our operating profit from ordinary activities for the current fiscal year.”

Meanwhile Pernod Ricard has announced the completion of the acquisition of V&S Vin & Sprit AB (“V&S”). This follows the decision by the European Commission on 17 July 2008 to authorise Pernod Ricard to acquire 100% of the shares in V&S in accordance with the agreements concluded between the Kingdom of Sweden and Pernod Ricard on 30 March 2008. The transaction is valued at €5.69 billion, including debt.

The acquisition of V&S enables Pernod Ricard to assume co-leadership of the global wine and spirits industry. ABSOLUT, the number one premium vodka worldwide, is the ideal addition to complete Pernod Ricard’s brand portfolio and makes the Group the second-largest player in the US. In addition, the local brands V&S brings with it will add to Pernod Ricard’s critical mass in the Nordic markets.

In keeping with its decentralised structure, Pernod Ricard is putting in place two Swedish-based business units within V&S.

- ‘The Absolut Company’ has the worldwide responsibility of ABSOLUT including notably production. It becomes part of the brand-owner network, alongside Chivas Brothers, Martell Mumm Perrier-Jouët, Irish Distillers, Malibu-Kahlúa International, Pernod Ricard Pacific and the joint venture Havana Club International. Ketil Eriksen has been appointed CEO of ‘The Absolut Company’ and reports to Thierry Billot, Deputy Managing Director of Pernod Ricard in charge of Brands.

- ‘Pernod Ricard Nordic’ will market Pernod Ricard’s international and local brands in Sweden, Denmark, Finland, Norway, the Baltic States and Iceland. The company has been created by merging V&S Wine (the leading north-European wine producer and importer), V&S Distillers (the leading north-European producer and distributor of regional and local spirit brands) and Pernod Ricard Nordic Countries (the current Pernod Ricard distribution subsidiary in the Nordic region). Michel Mauran becomes its Managing Director, reporting to Laurent Lacassagne, Chairman and CEO of Pernod Ricard Europe. In addition, Rolf Cassergren has been appointed Chief Operating Officer in charge of Finance, Marketing, Communications and Operations for Pernod Ricard Nordic. He reports to Michel Mauran.