Q1 2025 Pernod Ricard SA Corporate Sales Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrea Pistacchi - Bank of America - Analyst : Yes, good morning, HTlFne. Two questions then please. The first one on China and the provisional tariff increase, which took effect on Friday. So given the current environment there, I guess it seems reasonable to assume that you and the industry might not pass on the full impact of the tariff to the consumer. So, if you assume a more moderate retail price increase versus a full pass on, are you able to share any thoughts on what sort of volume elasticity one should expect, I guess, in a base case scenario? And also timing of potential price increases? If there are price increases, would you wait to see first whether the tariff increases become permanent? And then the second question, please, is on price mix, the minus 6%. Are you able to broadly separate the country mix impact or suggest just how much country mix impacted? And on the pricing environment that you are seeing, could you talk about that? Any specific countries? You called out the promotional environment in the U.S. when you were speaking earlier. Thank you.

Question: Andrea Pistacchi - Bank of America - Analyst : Can I just, sorry, ask quickly on the tariffs? Given the level of stock in trade, which is possibly quite high, is it again reasonable to assume that it will take some time before we actually see any potential impact on your COGS, probably not until the second half?

Question: Andrea Pistacchi - Bank of America - Analyst : Absolutely. Thanks very much.

Question: Olivier Nicolai - Goldman Sachs - Analyst : Hi, good morning, HTlFne and Florence. Two questions, please. You've maintained the guidance for full year `25, which assumes organic sales growth and flat margins. Now, that would imply at about 2% to 3% growth for the rest of the year, post maybe Q1. So, can you help us perhaps understand the key building blocks to get there, considering that two of your most profitable markets, China and the U.S., are not improving? And then secondly, on the corporate tax rate proposal in France, can you help us understand the impact this could have at the group level, please? Thank you.

Question: Olivier Nicolai - Goldman Sachs - Analyst : Okay, perfect. Thank you very much.

Question: Sanjeet Aujla - UBS - Analyst : Hi! Morning HTlFne, Florence. A couple from me please. Firstly, just coming back to the outlook for a stable organic margin, can you just help us bridge how you're thinking about gross margin, particularly with the more moderate pricing and negative country mix you are seeing? Is the expectation still for A&P to be 16% of sales this year? And so I guess by implication, are you expecting structure costs to be down year-over-year, as those efficiencies that you highlighted are stepping up? Thanks.

Question: Sanjeet Aujla - UBS - Analyst : Got it. Just a quick follow-up on cash flow. I guess with the top-line growth outlook, maybe a little bit less positive than at the start of the year. Does this perhaps force you to also revisit CapEx plans and working capital efficiencies as well? Just considering where cash conversion is and leverage?

Question: Sanjeet Aujla - UBS - Analyst : Thank you, HTlFne.

Question: Edward Mundy - Jefferies - Analyst : Morning, HTlFne, morning Florence. Two questions, please. So, the first on China. I think you said just now that you don't expect China to be minus 26 for the year. Can you perhaps talk about some of the reasons why it should get less bad from here, whether its comps or what else you are seeing? And then I'd love to focus a little bit more on some of the markets that are doing a bit better. Japan, Canada, Poland, Brazil, Turkey, Nigeria. Clearly, I don't want to go through all of them, but what's going on in those markets that's allowing you to provide an offset to both the weak China and US? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 7:00AM, PERP.PA - Q1 2025 Pernod Ricard SA Corporate Sales Call

Question: Edward Mundy - Jefferies - Analyst : Thanks HTlFne.

Question: Mitch Collett - Deutsche Bank - Analyst : Morning, HTlFne, morning, Florence. Sorry to return to the guidance for this year again, but you said specifically that Q1 was weaker than you expected and you say in the statement that China will be softer than you thought at the time of the four-year results. So, are there any markets at all that are getting better than you thought back in August to offset the markets that are clearly softer, and the Q1 performance that is weaker than you expected? And then my second question is on China tariff pricing. I appreciate it's somewhat commercially sensitive, but do you think you'll be able to take any pricing to reflect the tariffs ahead of Chinese New Year? And is there any spillover of the tariff impact into fiscal `26? Thank you.

Question: Mitch Collett - Deutsche Bank - Analyst : Sorry, if I could jump in. What I really wanted to understand is, are any markets better now than you thought they were back in August? Because, I mean it's pretty clear that China is softer and Q1 is softer. So I'm wondering if there's an offset that we might have missed. Are there any markets that have got better relative to your expectations back in August? Sorry if I wasn't clear.

Question: Mitch Collett - Deutsche Bank - Analyst : Understood. Thank you, HTlFne.

Question: Gen Cross - BNP Paribas - Analyst : Good morning, everyone. Thank you for the question. My question is just on the U.S. spirits market, which I think you've commented is continuing to normalize. Are you seeing any improvement in demand for core spirits? And then specifically for the second quarter, is it fair to assume that you continue to expect further inventory adjustments? And if you could quantify whether you expect them to be smaller than the Q1, that would be helpful as well. Thank you.

Question: Gen Cross - BNP Paribas - Analyst : Thank you.

Question: Simon Hales - Citi - Analyst : Thanks. Morning, HTlFne, good morning Florence. So just two quick ones then HTlFne. Firstly, could you comment on your FX expectations now for the fall year? I think back in August, you were looking at about EUR 70 million to EUR 80 million headwind on EBIT from FX. Can you provide us with an update on your thoughts now? And then just secondly, on Mexico, clearly a little bit of incremental weakening going on in that market. What's driving that on the ground? Can you provide a bit more color on what you're seeing in terms of consumer off-take trends there, please? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 7:00AM, PERP.PA - Q1 2025 Pernod Ricard SA Corporate Sales Call

Question: Simon Hales - Citi - Analyst : Okay, so it's not that the consumer confidence has deteriorated that you are seeing on the ground in Mexico. You think it's just a Q1 impact.

Question: Simon Hales - Citi - Analyst : Got it. Thank you.