Pernod Ricard S A

Welcome to our H1FY24 Sales and Results presentation, to be followed by a Q&A. We are hosted today by Alexandre Ricard, our Chairman and CEO, and Hélène de Tissot, our EVP, Finance and IT. Alex and Hélène, over to you.

Thank you very much, Florence, and good morning to all of you. Let's dwell directly into our first half financial year 24 sales and results. Globally speaking, we've had a robust performance with organic sales down 3% and organic profit from recurring operations down 3%. Regarding the overall H1 performance, I would like to share with you maybe four underlying factors. The first one is the overall normalization of the spirits market globally, particularly skewed towards the US after three years post-COVID super cycle across our spirits industry. The second factor is inventory adjustments in the US, particularly at a retailer level in a high interest rates, therefore high cost of carry environment. The third element is a weaker consumer confidence in China. within a weak macroeconomic environment. And finally, the fourth element is strong growth in India and very strong growth in Asia, excluding China, very strong growth in Africa, Middle East, in Central and Eastern Europe, if you exclude Russia, and finally, pretty strong resilience in Western Europe. That's basically the four key factors that describe our first half performance. At the same time, we sustained our organic operating margin, principally related to a very strong gross margin expansion, and this is a direct consequence of our revenue growth management strategy, and as well operational efficiencies. We've maintained strong investments behind our portfolio brands with roughly 1 billion euros of marketing investments in growth versus the first half a year ago. And we've maintained very strict control of our structure costs, which are broadly stable. We are accelerating our strategic investments as planned and anticipated for the long-term sustainable growth of our business. So we've had a significant step up in H1 and our capex behind our Irish whiskey capacities, behind our North American capacities in Kentucky, and behind our Scotch capacities in Scotland. We've also secured future growth by maintaining strong levels of investments in our aged or strategic stock. And finally, while the free cash flow reflects perfectly the lower reported PRO, which is also impacted by currency effects, and accelerated strategic investments, as I've described two minutes ago. You have here the principal financials, which we'll go into a lot more detail with Hélène in a few minutes. So broadly saying, if you exclude Russia, we're growing in two out of the three regions. You see here, minus seven in America is impacted by destocking. Half of that is destocking. You see Europe at minus 4, which would have grown 1%, excluding the Russia technical impact. And finally, Asia, rest of the world, plus 1%, impacted by a weaker consumer confidence in China. And you see very strong pricing across the globe. I thought this analysis could be of interest to you because this perfectly illustrates what we call by normalization. So the first column is basically the pre-COVID semester. H1 fiscal year 20 was the semester starting July 2019 up to December 2019. We used an index 100 for the following first half, just to show you the exponential growth we've had, which we call the post-COVID super cycle, which is now normalizing. And by the way, ever since that super cycle started, you see that our KGAR is at plus 8%, whereas our natural framework is somewhere between 4% and 7%. We're still very consumer-centric. We've been extremely active all the way through to the run-up to the festive period, to the OND period. And without further ado, I'll share with you one of our commercials that was very successful across Christmas.

Friday gold.