Pernod Ricard S A

Good morning, ladies and gentlemen, and welcome to our first quarter sales call. As said, we'll go through a brief presentation and then give you a chance for some questions. We're hosted this morning by Hélène de Tissot, our Finance, IT and Operations Director. Hélène, over to you.

Thank you, Julia. Good morning, everyone. So let's start with this Q1 sales performance. The organic sales growth is plus 1.3% for this quarter, plus 4% reported sales. So this is a moderate growth, which is in line with our expectations on a very high basis of comparison. As a reminder, last year the growth was plus 10.4% for the first quarter. So if I may, I will go through the key markets first, and then we move to the brands. So we start with our number one market, the U.S. So this is a good start in the U.S., plus 6%, thanks in particular to innovation and there's as well some advance shipments in that quarter performance. Moving to China and India, a good growth, plus 6% for China, plus 3% for India on a very high basis of comparison. Global travel retail is in decline by 6%, following a very strong Q1 last year with double-digit growth in Q1 fiscal year 2019. And we have a good growth in Europe, plus 3%, thanks to strong sales in Eastern Europe and return to growth in Western Europe. So moving to the brands, our strategic international brands are growing by 3% for this first quarter, with growth moderation, which is due to the high basis of comparison we had, especially on Martel and Scotch last year. but an acceleration of Jemison in this first quarter, but as well Befitter, Malibu, and Havana Club. So strategic local brands plus 2%, with a softer growth due to a very high Q1 last year for Seagram's Indian whiskeys. Specialty brands, which is the new category in our house of brands that we started to communicate about in the H1 last year. is performing well, plus 15%, a very dynamic performance, particularly for Lillet, Monkey 47, but as well our Agave portfolio with Delmage and Altos. Strategic grinds, minus 2%, which is a modest decline linked to the continued implementation of our value strategy on Jacobs Creek, mainly in the UK. Pricing is positive, plus 2%, on strategic brands. So let me now deep dive into the key markets. So USA plus 6%, as I mentioned, this is a good start. Jameson, which is our sub-brand, is in strong growth with the dynamic development of Black Barrel. We have as well the continued dynamism on our growth relays, in particular the Glenlivet, which is driven by Funders Reserve and the launch of the Glenlivet 14 years old. Talking about our bastion now, solid growth for Malibu and Kahlua, but Absolute is still in decline despite a promising launch of Absolute Juice. I take the opportunity of talking about the U.S. to mention the add of a new American whiskey to our new American whiskey portfolio with the completion of the Castle Brown acquisition and of the Jefferson acquisition as far as American whiskey are concerned. since the 9th of October. Trade tariffs are going to be applied as soon as tomorrow to the single malt Scotch and Spanish wine. Global travel retail, I mentioned it, minus 6%, and this is mainly due to a high basis of comparison, but as well some promotional phasing in Europe, and we have a very strong price mix in global travel retail in this period. Moving to China, so good growth, plus 6%. versus a very high comparable basis, plus 27% last year. So overall good growth, despite some softer on-trade environment. Martel, strong pricing, impact in this performance. As I'm sure you remember, we increased our price by 5% last February, so we have the effect, the full impact of that in the Q1 performance, with softer volumes, which is... perfectly in line with our mid-term strategy in terms of sustainable inventory management. Chivas is in decline due to the challenging on-trade environments. We continue as well to have a very dynamic development of growth relays, in particular with double-digit growth of Absolute and Valentine's Finest. Moving to India now, so good growth, plus 3% versus a very high, plus 34% last year. There is some softening macroeconomic environment happening in India, and we had as well some impacts of very severe flooding in the Q1. Seagram Indian whiskeys are driven by a dynamic growth of Imperial Blue, and we have as well continued strong double-digit growth for our strategic international brand and for Jacobs Creek. So moving now to the other key markets, Europe. So France is growing by 3%. This is due to promotional phasing in a market which stays difficult. You have Nielsen volume indication in our presentation of minus 3%. Having said that, Absolute is again in a double-digit growth in France. Spain is stable with a gene portfolio, mainly B-fitter and C-gram genes that are now gaining share. UK minus 1%, with a very strong dynamism in Jean, offset by the value strategy of Jakob Strick, as was mentioned before. So we are continuing to gain share in that market. Germany, strong growth, thanks mainly to Lille, Havana Club and Absolutes, with strong pricing as well. Russia, we mentioned Eastern Europe a bit before, so Russia is in the as well as strong continued double-digit growth driven by strategic international brands, in particular whiskeys and Martel. Moving to America, so Canada is in decline. It's mainly linked to phasing, despite double-digit growth of Jameson. Latin America, modest growth overall with a strong dynamism in Brazil. Asia, rest of the world, so Japan, a continued strong growth in Japan, led by Chivas. and a good price mix. Korea, significant decline with improving performance on strategic international brands, offset by the transfer of imperial distribution to third party. And Africa Middle East, plus 9%, driven mainly by a strong growth in Turkey, Nigeria, West Africa, and as well, Angola. So maybe let me now move to the outlook for the full year. So in a particularly uncertain environment, Panorica expects to obviously continue the execution of our Transform and Accelerate strategic plan that we presented to you a few months ago, focusing on embedding dynamic growth and delivering approaching leverage, obviously in line with our objective to maximize long-term value creation. We are as well going to be focusing on the implementation of the Reconquere project in France that we announced a few days ago with the main objective to return to growth in medium term in that country. We expect dynamic sales growth to continue, albeit growth rates will moderate versus fiscal year 2019 in India and China, which is fully consistent with our strategic plan assumptions. We expect, as well, a dynamism in the U.S., following the inventory optimization we implemented last year, and with, as well, the integration of the new American risky portfolio I was mentioning before. As mentioned, as well, in our full-year communication, we're going to keep, invest, and increase our investments behind strategic investments, meaning key capex and strategic inventory priorities. We are starting our share-buy-back program from tomorrow, and you have some more details on the execution of that first tranche in the presentation. And we expect a significantly positive effects impact on our profit from recurring operation. So, we are confirming our guidance for the year, which is an organic growth in profit from recurring operation between plus five and plus 7%.

Thank you very much. We'll turn to your questions now, please.