Pernod Ricard today reported results for the year to 30 June, with the second half sharply affected by the impact of COVID-19. The group also warned that travel retail faced a “prolonged downturn” due to the impact of pandemic-related travel restrictions.
Full-year sales reached €8,448 million, down by -8% on a reported basis and by -9.5% in organic terms, aided by a favourable US Dollar-Euro impact.
For FY20, sales trends by region were:
- Americas: -6%, with good resilience in USA and Canada in slight growth, but double-digit decline in Latin America and travel retail
- Asia-RoW: -14%, driven mainly by China, India and travel retail, although this came against a high prior year comparison
- Europe: -6%, with Germany, UK and Eastern Europe growing, partially offsetting declines in travel retail, Spain and France.
On the key categories and brands, the group noted:
- Strategic International Brands: -10%, after broad-based growth in H1, mainly driven by Martell, Chivas Regal, Absolut and Ballantine’s
- Strategic Local Brands: -9%, in modest growth at the end of nine months, but strong decline in Q4, mainly due to Seagram’s Indian whiskies, on a high comparison basis
- Specialty Brands: +7%, despite Covid-19, thanks to more favourable geographic exposure, with dynamic growth of Lillet, Altos and Redbreast
- Strategic Wines: -4%, due mainly to Jacob’s Creek, despite growth of Campo Viejo.
Q4 sales fell by -36.2% in organic terms (-37.9% reported) to €1,238 million, with a significant impact from COVID-19 throughout the world, particularly for travel retail and the on-trade.
Profit from recurring operations (PRO) was solid in H1 at +4.3% in organic terms, but fell sharply in H2 for an overall figure of €2,260 million, an organic decline of -13.7% and -12.4% reported.
Group share of net PRO was €1,439 million, -13% reported versus FY19. Group share of net profit for the year was €329 million, -77% on a reported basis, and affected by a €1 billion asset impairment triggered by COVID-19, in particular on Absolut (€912 million gross; €702 million net of tax.)
During FY20, Pernod Ricard said that it gained or held market share in its top ten markets.
Chairman and Chief Executive Officer Alexandre Ricard said: “The group has proven very resilient through FY20 and demonstrated its agility and ability to keep its supply chains operational, control costs and manage cash.
“For FY21, Pernod Ricard expects continued uncertainty and volatility, in particular relating to sanitary conditions and their impact on social gatherings, as well as challenging economic conditions. We anticipate a prolonged downturn in travel retail but resilience of the off-trade in the USA and Europe and sequential improvement in China, India and the on-trade globally.
“We will stay the strategic course and accelerate our digital transformation while maintaining strict discipline, with clear, purpose-based investment decisions. We will harness our agility to adjust fast to capture new opportunities. Thanks to our solid fundamentals, our teams and our brand portfolio, I am confident that Pernod Ricard will emerge from this crisis stronger.”
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