We seek nothing but Perfection Annual Results Year ended 31 March 2014 6 June 2014
François Hériard Dubreuil Chairman and Chief Executive Officer
Decline in Sales following 4 Years of Growth (in published terms) We seek nothing but Perfection (€m) 1 400 CAGR 2008/13 +14% CAGR 2008/14 1 200 +8% 1 000 800 600 400 200 0 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 3 Annual Results for the year ended 31 March 2014
2013/14 Key Figures We seek nothing but Perfection Change Published Organic ■ Sales €1,031.6m (13.5%) (10.7%) of which own brands € 788.6m (17.6%) (14.8%) ■ Current operating profit €150.2m (38.8%) (40.8%) ■ Current operating margin 14.6% - ■ Net profit (excluding non-recurring items) €80.2m (46.9%) ■ Net profit (Group share) €62.4m (52.2%) ■ Net earnings per share €1.63 (47.4%) (excluding non-recurring items) ■ Net earnings per share (Group share) €1.27 (52.4%) ■ Net debt/EBITDA ratio: 2.09 4 Annual Results for the year ended 31 March 2014
Change in net debt over 10 years We seek nothing but Perfection (€m) 839.7 771.5 562.1 531.9 501.4 10-year average : €484m 440.9 413.5 328.9 265.5 188.6 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 5 Annual Results for the year ended 31 March 2014
Unchanged Strategy We seek nothing but Perfection ■ Maintaining our high-end strategy and brands’ image ■ Significant and targeted investment ■ Geographical balance ■ Strict cost control Confidence in the medium to long-term 6 Annual Results for the year ended 31 March 2014
Review of Activities François Hériard Dubreuil Chairman and Chief Executive Officer Luca Marotta Chief Financial Officer
A Year of Transition We seek nothing but Perfection ■ Double-digit decline in sales: decision to reduce inventory levels in China against a backdrop of weaker consumption ■ Solid growth in the US ■ Growth in Europe, the Middle East and Africa ■ Negative currency impact on sales but positive on gross profit and current operating profit ■ Strategic investment maintained, targeted by brand/market ■ Sales teams strengthened in key markets ■ Current operating margin of 14.6% 8 Annual Results for the year ended 31 March 2014
A Year of Transition We seek nothing but Perfection Brands ■ Rémy Martin: organic sales decline of 20.8% ■ Will to reduce inventories in China (amplified in the second half) ■ Healthy growth in the US, Russia and Japan ■ Liqueurs & Spirits: slight growth (up 3.3% in organic terms) ■ Cointreau - Solid growth in US demand - Japan, Central/Latin America on track to be future growth drivers ■ Metaxa - Dynamic in its key markets: Greece, Russia and Eastern Europe ■ Mount Gay - Black Barrel successful in the US, Australia, New Zealand and the UK ■ Bruichladdich - Doubling of production and streamlining of the range on 3 brands/3 characters: Bruichladdich/Port Charlotte/Octomore 9 Annual Results for the year ended 31 March 2014
A Year of Transition We seek nothing but Perfection Markets ■ Slowdown in Asia-Pacific ■ Decline in China but continued momentum in Japan ■ Solid performance in the Americas region ■ Healthy price-mix effect in the US ■ Robust growth in Central and Latin America markets ■ Growth in the Europe, Middle East and Africa region ■ Competitive environment in Western Europe ■ Healthy performance in Central Europe, Eastern Europe and Africa ■ Distribution network extension ■ New frontier markets: Africa, India ■ New subsidiary in the UK 10 Annual Results for the year ended 31 March 2014
Group Sales We seek nothing but Perfection €m Currency impact Organic (127.8) (33.9) €(161.7)m 1,193.3 1,031.6 Organic (10.7%) Published (13.5%) March 13 March 14 11 Annual Results for the year ended 31 March 2014
Quarterly Change in Sales We seek nothing but Perfection (in organic terms) Q1 Q2 Q3 Q4 H1 H2 2013-14 -2.3% -3.6% -5.3% -10.7% -16.1% -18.9% -17.8% 12 Annual Results for the year ended 31 March 2014
Divisional Change in Sales We seek nothing but Perfection Rémy Martin Liqueurs & Spirits Partner Brands Group +6.1% (10.7%) Organic (20.8%) +3.3% +0.2% +2.7% Published (23.4%) (13.5%) 13 Annual Results for the year ended 31 March 2014
Breakdown of Sales We seek nothing but Perfection By division By region Sales: €1,031.6m Americas Liqueurs & Partner 40% (+7pps) Spirits Brands 23% (+3pps) 24% (+4pps) Europe/ Asia- M. East/ Pacific Africa 29% (-11pps) 31% (+4pps) Rémy Martin 53% (-7pps) 14 Annual Results for the year ended 31 March 2014
Breakdown of Sales by Geographic Region We seek nothing but Perfection Rémy Martin Liqueurs & Spirits €551.2m €237.3m Americas Americas 36% (+9pps) Asia- 32% (-1pp) Pacific Europe/ M. East/ 10% (+0pp) Africa 17% (+4pps) Europe/M. East/ Asia-Pacific Africa 47% (-13pps) 58% (+1pp) 15 Annual Results for the year ended 31 March 2014
Current Operating Profit We seek nothing but Perfection Currency Volume Price/ A&P Other €m impact Mix +5.0 +24.7 +20.3 (19.2) 245.4 (126.0) Organic ( 40.8%) 150.2 Published ( 38.8%) €(95.2)m March 13 March 14 COP/Sales: 20.6% 14.6% (org: 13.6%) 16 Annual Results for the year ended 31 March 2014
Net Profit We seek nothing but Perfection €m Net profit excluding non-recurring items Net profit Group share Published (52.2%) Published (46.9%) 151.5 130.4 80.2 62.4 March 13 March 14 March 13 March 14 17 Annual Results for the year ended 31 March 2014
Rémy Martin We seek nothing but Perfection Sales decline (20.8%) organic in volume (10.7%) Targeted innovation €m VSOP Jolin Tsai +12.1%* +25.1%* +12.7%* (20.8%)* 800 Limited Edition (China) 719.8 592.5 551.2 600 486.0 400 1738 (US) 200 0 Centaure (China) March March March March 2011 2012 2013 2014 * in organic terms 18 Annual Results for the year ended 31 March 2014
Rémy Martin We seek nothing but Perfection Current Operating Profit Currency Volume Price/ A&P Other €m impact Mix +3.9 + 33.2 + 15.8 (10.9) 216.6 (133.2) 125.4 Organic (43.9%) Published (42.1%) €(91.2)m March 13 March 13 March 14 March 14 COP/Sales: 30.1% 22.8% (org. 21.3%) 19 Annual Results for the year ended 31 March 2014
Liqueurs & Spirits We seek nothing but Perfection Sales growth of 3.3% organic in volume (0.6%) A premium and diversified portfolio Breakdown of sales €m Liqueur (3.7%)* +5.1%* +3.8%* +3.3%* 300 Cointreau Fizz 237.3 237.0 250 213.5 205.8 200 Rum 150 Mount Gay Black Barrel 100 50 0 Metaxa 12* March March March March 2011 2012 2013 2014 * in organic terms 20 Annual Results for the year ended 31 March 2014
Liqueurs & Spirits We seek nothing but Perfection Current Operating Profit Currency Volume Price/ A&P Other €m impact mix +4.5 +0.3 +1.8 (8.5) (5.8) organic (21.2%) 44.8 37.1 published (17.1%) €(7.7)m March 13 March 14 COP/Sales: 18.9% 15.6% (org. 14.4%) 21 Annual Results for the year ended 31 March 2014
Partner Brands We seek nothing but Perfection Sales: +6.1% organic Current operating profit +2.1% in volume €m €m 243.1 (*) 8.7 (*) 236.6 9,0 250 220.1 216.1 8,0 200 7,0 6,0 150 4.5 5,0 4.2 4,0 100 2.6 3,0 2,0 50 1,0 0,0 0 March March March March March March March March 2011 2012 2013 2014 2011 2012 2013 2014 (*) inc. €103m for Edrington US (*) inc. €3m for Edrington US 22 Annual Results for the year ended 31 March 2014
Current Operating Profit We seek nothing but Perfection % Change 2013 2014 Published €m Sales 1,193.3 1,031.6 (13.5%) 736.9 618.2 (16.1%) Gross profit % of sales 61.8% 59.9% Sales and marketing expenses (403.3) (379.8) Administrative expenses (89.8) (89.6) Other income & expenses 1.6 1.4 Current operating profit 245.4 150.2 (38.8%) Current operating margin 20.6% 14.6% 23 Annual Results for the year ended 31 March 2014
Current Operating Margin We seek nothing but Perfection (600 bps) 20.6% +100 bps (320 bps) (1) 14.6% (40 bps) + +130 bps +130 bps (340 bps) FX FX = (190 bps) (190 bps) published published 2012/2013 Gross A&P Distribution/ Currency 2013/2014 impact (2) COP/Sales profit Other COP/Sales (1) exc. transactional currency impact; (2) Translation and transactional impacts 24 Annual Results for the year ended 31 March 2014
Underlying decline in Current Operating profit limited to 7% We seek nothing but Perfection 300 Published COP: €245.4m 250 Underlying decline in Overstocking estimated at €40 m 2013/14 COP: (7.4%) 200 €(15.2)m Adjusted COP: €190.2m Readjustment of stocks (€40 m) 150 Adjusted COP: Published COP: 100 €205.4 m €150.2m 50 0 2012/2013 2013/2014 25 Annual Results for the year ended 31 March 2014
Change in Gross Margin over 6 Years We seek nothing but Perfection €m CAGR CAGR 61.0% (1) 61.1% (1) +12.4% +12.4% 696.9 (1) 61.4% 668.2 (1) 630.0 57.1% 518.3 55.2% 445.9 52.5% 373.2 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 (1) Restated for stock adjustments; Published data was €736.9m (61.8%) for 2012/13 and €618.2m (59.9%) for 2013/14 26 Annual Results for the year ended 31 March 2014
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