- Wine & Spirits operating profit: € 742 million (+ 9.6% organic growth) - Group net profit: € 487 million (+ 5.1%) - Dividend for 2004 increase : +9,2%
The Board of Directors of Pernod Ricard, meeting on 16 March 2005 under the chairmanship of Patrick RICARD, approved the interim accounts for the first 12 months of the extended 18-month 2004-2005 financial period ending 30 June 2005.
Wine & Spirits 2004 net sales and financial results
Three major features marked 2004 and are reflected in the Group’s financial results: • The premiumisation of the portfolio, an engine for more profitable growth, • Accelerated progression of Advertising and Promotion expenditures for long term brand growth in promising markets, and • The cost leverage effect of a global sales network in a growing business.
2004 net sales (excluding duties and taxes) amounted to € 3,490 million, reflecting a vigorous 5.8% organic growth that was partially offset by a significant foreign exchange impact of €108 million (-3.2%) and a negligible structure impact (-0.5%).
Asia/Rest of World and the Americas regions were the growth drivers of the Group’s Wine & Spirits business in 2004: Asia enjoyed an excellent year, with strong progression of Chivas and Martell sales in Chinese Asia and fast growth of local brands in India and Thailand. All of the premium brands experienced growth in the USA, while Chivas accounted for some 50% of the sales growth in South and Central America.
Wine & Spirits gross profit, with an organic growth rate of 7.1%, rose more quickly than net sales, reflecting the premiuminisation of the portfolio. Thus, with a +3% increase in volume, the Top 12 brands saw their net sales increase by +8% (at constant exchange rates), accounting for 75% of the growth in gross profit.
This, coupled with strict control of commercial and general costs, enabled an improvement in operating profit (+9.6% organic growth), while at the same allowing for a significant increase in Advertising and Promotion investments (+10.5% organic growth), a fundamental pillar of sustainable development of the business.
Wine & Spirits 2004 operating profit amounted to € 742 million, after charging a € 63 million adverse foreign exchange impact, generating an operating profit margin of 21.3% (22,4% excluding foreign exchange impact).
Consolidated net sales and financial results
Pernod Ricard Group reported 2004 full year net sales (excluding duties and taxes) of € 3,572 million and operating profit of € 743 million, essentially comprising the results of the Group’s Wine & Spirits business on which the Group has completed its strategic refocusing.
Net finance costs improved by 12% to € 89 million. Net exceptional income amounted to € 36 million, notably reflecting the capital gains realised on disposals (€ 33 million additional Orangina disposal and € 20 million other disposals).
Accordingly, Group net profit improved by 5.1% on the previous year to € 487 million.
Net debt at 31 December 2004 amounted to € 1.8 billion, down € 265 million from the previous year-end despite the buyback of € 101 million worth of shares by the Company.
Second interim cash dividend
Having regard to the extended length of the fiscal period (18 months), the Board policy is to pay two interim dividends and a final dividend. A first interim of €0.98 was paid on 11 January 2005. A second interim of €1,16 will be paid on 7 June 2005. Compared to the total dividend paid in respect of 2003 of €1.96, these two cash payments, €2.14 represent a dividend growth of 9.2% reflecting the excellent Group results and its favourable outlook. A final dividend will be paid following the General Meeting convened to approve the 2004-2005 financial period accounts.
Conclusion
Commenting on these results, Patrick Ricard, Chairman & CEO of Pernod Ricard said: “These are good results. The factors which enabled us to achieve them, like the development of our premium brands and our leading position in high potential markets, are in place and growing the business. Thus I look forward to the future with confidence.”
