Pernod Ricard S A

Hello, everyone. So we're very pleased to welcome you to our Q&A for 24 NetSelf calls. So as you've seen, we've released a press release on our website. So Hélène Le Tissot will give you some very short opening remarks before jumping into the Q&A. And then for the Q&A, as per last time, we remind you that we will take two questions per caller so that everyone has an opportunity to ask his questions. Thank you.

Good morning, Florent. Good morning, all, and thanks for joining our Q24 Q1 sales call today. As you've been reading the press release published on our website this morning, today we are reporting a decline of minus 2% in organic net sales for our first quarter. As expected, the soft start of the year begins notably with USA in decline, reflecting high comparison basis and a normalizing market context. So is China, where we also cycled high comparatives, coupled with soft consumer demand. Echoing Alexandre's quote in the press release this morning, I'm also pleased to see that those declines were largely offset by the performance of our other markets. As a matter of fact, we enjoyed a very dynamic performance in the rest of Asia, modest growth in India due to high comp, some resilience in Europe with dynamic growth in France, Germany, and Poland, and stability in federal retail due to phasing. I would say that this serves as a strong illustration of the combination of two competitive advantages, number one being the diversity of our leading premium portfolio of international spirit brands, number two, our broad geographic breadth across mature and emerging markets. We also report a strong price mix effect of plus 7%, notably benefiting from last year's price increases across brands and markets. So let me zoom now on Q1 in our must-win markets, starting with USA at minus 8%. So consumer demand remained resilient less over the summer as the market continues to normalize towards its long-term average transmissible digit growth. Net sales declined on an unfavorable comparison basis, also reflecting inventory adjustments being made in particular at retailer level. Share gains were made with Jemison, Codigo, Malibu, Kahlua, and the Glenlivet. We have prepared strong activation plans ahead of festive season, and we hold a positive outlook for the full year. Moving now to China, with net sales at minus 8%, so sales declined in a challenging macroeconomic environment with softer consumer demand, and we find a high-comp basis as we cycle a record 53-meter-ton festival. Q1 sees a solid price effect following fiscal year 23 price increases, which happened in May. We are encouraged to see signs of improvement in September, and we have a positive outlook in China. Moving now to India. India is at plus 1% in Q1, which is modest growth against a high comparison base. These are strong consumer fundamentals, as you know, in that market that are supporting strong growth for the full year. with easing comparison basis and very solid activation plans ahead of festive seasons in Q2. We had a good price mix effect for C-RAM whiskeys with continued strategic focus on the higher end of the range and continued strong development of our strategic international brands. Global travel retail is stable in Q1 with a gradual recovery in Asia, but sales have been impacted by shipment phasing and high comparison basis in Europe. Passenger traffic now at circa 90% versus pre-COVID, and we expect strong growth for the full year in travel retail. Looking now at the full year for fiscal year 2024 and why the environment is challenging, we are confident in delivering broad-based and diversified organic net sales growth with a positive outlook on U.S. and China and strong growth in travel retail and India. It is our intention to deliver fiscal year 24 performance within our plus 4% to plus 7% net sales organic growth midterm range, probably towards the lower end of the range. We expect to deliver organic operating margin expansion as we focus on rolling growth management and operational efficiencies with ANP at circa 60% of net sales and disciplined investments in structure. We remain very confident in the attractiveness of the storage market and in the long-term demographic and consumer trend tailwinds. That concludes my opening comments, and now, Florence, I believe we can open the line for questions.

Thank you. This is the conference operator. We will now pitch an end-answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove your sub from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Edvard Mondi with Jefferies. Please go ahead.