Pernod Ricard S A

Good morning, everyone, and thank you for joining our Q1 FY27 sales call. I'm joined today by Mof Kwasa, our EVP Finance and Tech. Unless specified otherwise, all sales call threads are organic. Mof, over to you. Thank you, Joelle. Good morning, everyone. Very happy to be with you this morning. I trust you have all received The press release this morning, so I'm just going to read through it relatively quickly to leave time for the Q&A. So we are reporting net sales of minus 1%, a sequential improvement on Q4 last year despite a mixed environment, which is consistent with our full year expectation and broadly stable organic net sales. Volumes in Q1 are back to growth at plus 6%, with strategic international brand volumes growing plus 2%. Sales in the U.S. declined by minus 10%, and in China by minus 25%, with both markets being impacted by inventory adjustments as expected. The underlying depletion in China are returned to growth, Confirming the cautious trade optimism ahead of the Mid-Autumn Festival as flagged during our food year communication. Excluding the U.S. and China, rest of world sales grew by plus 4%, with strong performance across a number of Asia rest of world markets. India was a particular highlight, with sales up plus 19%. Thank you very much. So let me start with our number one market, the U.S., where sales were down minus 10%. Market trends have slightly improved over the summer. The total spirits market has declined by circa minus 2%, and bottled spirits by circa 4%. As highlighted, the consumer sentiment remains low, with affordability a particular issue for some consumers. Our sell-out in Q1 is at circa minus 6% and our gap to market continues at circa 2 points. The difference between sales down minus 10 and sell-out down minus 6 reflects the impact of inventory adjustments. Looking at our brands, Jameson and Cadua sell-outs are performing ahead of their respective competitive sets. We are also seeing a marked improvement in Scruble and a strong rebound in Malibu benefiting from the success of Malibu Pink. Sales are supported by our Q1 innovations including small formats from Malibu Coconut and Pink as well as Croubeau Peanut Butter and Jelly. Jameson Distiller Batch is also extending the Jameson Irish Whiskey Portfolio. These launches build on the innovation we already introduced last year. Ahead of the important holiday period, we have a strong campaign program across the portfolio. We are particularly excited about the significant initiative of Jameson with the NFL sponsorship, which kicked off in September and will be supported by a full 360 campaign throughout the NFL season with a key activation peak during the OMD period. In India, We report sales growth of plus 19%. The market continues to enjoy dynamic consumer fundamentals and sales are driven by strong consumer demand as well as the continuation of the premiumization trend. Underlying sales grew in the high single-digit range with an additional benefit from the Mahastra comparison base and from pipe fill effect Thank you very much. This is a significant improvement from last year's sharp decline and confirms the cautious trade optimism we mentioned at the start of the summer. For Martel, we have seen a return to growth in our off-trade depletion with a successful mid-autumn festival campaign that has been driving consumer and trade engagement. In BeyondTrade, we are lapping the regulatory crackdown which gives a more favourable base. However, the channel continues to be under pressure, leading to decline there. Underlying trends for the rest of the portfolio remain resilient overall, notably supported by a strong performance of Beglen Nivet, Royal Salutes, and premium brands such as Jameson and Olmeca. If I turn to global travel retails, sales were down minus 4%. Overall, global travel numbers remain strong, but sales have been impacted by the ongoing Middle East conflict, and this has particularly affected some of the Asian travel retail markets. In the meantime, Europe travel retail delivered strong growth. In other markets, we report good growth in Asia and the rest of the world, largely driven by Japan, which continues its dynamism. Korea and Taiwan both returning to solid growth, and Turkey's continued good momentum. Europe had a soft start to the year, reflecting phasing in some markets and continued pressure in the on-trade. In Western Europe, sales declined in France and Spain, with a persisting sharper decline in Germany. Eastern Europe was also soft, with Poland Impacted by ongoing customer negotiation. In the Americas, sales declined in Brazil due to phasing and in Mexico with continued weak consumer demand. In North America, Canada saw also a modest decline. As it relates to our full year and medium term outlook, the full wording is in this morning's press release, but the key message is that we are confirming our guidance including broadly stable sales in a contrasted and volatile environment and we strongly defend organic operating margins supported by strict cost control and the acceleration of our operational efficiency program. In conclusion, Q1 sales were mixed but improved significantly sequentially with encouraging momentum in a number of key markets, notably in Asia. In China, underlying sales have returned to growth. Our broad geographic footprint and diversified portfolio provide clear sources of resilience in this volatile environment. At the same time, we continue to adapt our brands, our activation to the evolving consumer trends and occasions. Thank you for your attention. That concludes my prepared remarks. I will now be happy to take on your questions. Thank you very much, Maud. So, operator, we can open the line for questions. We welcome, please, two questions each, as usual. Thank you.

Thank you. This is the conference. Operator, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one under touchtone telephone. To remove yourself 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 Andrea Pistacchi, Bank of America.

Good morning, Mauve and Joelle. The first question is on China, please. You confirmed the cautious optimism in the trade ahead of Mid-Autumn Festival and your positive depletions. This is clearly very encouraging, but it is in contrast to what other companies, particularly in luxury, are saying and what they've reported so far in the quarter. So what do you think is underpinning this more positive sentiment? Is it the comps, the lapping the crackdown, or maybe something else? And I don't know whether you have much visibility yet on mid-autumn festival sellout, but how do you feel, therefore, about China as we head towards CNY and for the full year? The second question, please, is on the strong performance, the very strong performance in Asia, rest of the world, when you exclude both China and India. I calculate that China and India, the region was up probably something like mid to high teens, which is a material acceleration from last year. I know there's many different countries there, and I think you called out good performance in a few, Japan, Korea, Taiwan. Could you provide a bit more colour on this strong performance and whether you're confident that this positive momentum, I mean, not quite at this level, but the positive momentum in the region can continue? Thank you.