PERNOD RICARD: Strong sales and profit margin growth in the 2006/2007 1st half-year

Market Wire, March, 2007

Strong sales and profit margin growth in the 2006/2007 1st half-year

- Operating profit from ordinary activities: up EUR 886 million ( 20%*)

- Net profit from ordinary activities: up EUR 529 million ( 18%**)

Press release - Paris, 8 March 2007

The Board of Directors of Pernod Ricard, meeting on 7 March 2007 under the chairmanship of Patrick Ricard approved the IFRS financial statements for the first half year and outlined prospects for the 2006/2007 full year.

In respect of the 2006/2007 first half (1 July to 31 December 2006), Pernod Ricard recorded very strong growth in results due to vigorous sales by all portfolio brands, especially premium brands, as well as the implementation of synergies derived from the Allied Domecq acquisition in July 2005.

2006/2007 interim sales

2006/2007 1st half-year consolidated sales (excl. taxes and duties) grew by 7.3% to EUR 3,507 million, being 9.7% organic growth (negative foreign exchange impact of 2.7%, positive Group structure impact of 0.7%).

This outstanding performance was made possible by the powerful Pernod Ricard network and the quality of its portfolio recently enhanced by the brands originating from the Allied Domecq acquisition.

The Group's 15 strategic brands were the ones experiencing the fastest growth (organic growth of 9% in volume and 14% in value), with an even more vigorous growth for the super and ultra premium segments: Chivas 18 years old, Ballantine's 17 - 21 - 30 years old, Royal Salute, The Glenlivet, Martell (Cordon Bleu and XO) and Perrier-Jouët Belle Epoque.

All regions contributed to the increase in consolidated sales, with a marked acceleration in the second quarter and the increased scale of emerging countries.

Operating profit from ordinary activities

The rapid implementation of integration enabled the Group to achieve the full cost synergy objective, with EUR 135 million over the 2006/2007 1st half-year or EUR 270 million over the full financial year. Structure costs thus amounted to EUR 516 million (14.7% of sales, compared to 16.3% over the same period of the previous financial year). This performance, combined with vigorous sales generated a very strong increase in operating profit from ordinary activities ( 20%* to EUR 886 million) and a further sharp improvement in Pernod Ricard's operating margin, which rose to 25.3% from 23.5%.

All regions contributed to this growth in operating profit from ordinary activities, with a marked improvement both in Europe and in France and the confirmed strong dynamism of the Americas and Asia/Rest of World regions. The continuing success of Pernod Ricard's internationalisation, with 53% of profits achieved from these high growth regions (Americas and Asia/Rest of World), is thus confirmed in spite of the decrease in value of the US dollar.

* Organic growth, measured from August to December for Allied Domecq brands and over 6 months for Pernod Ricard original brands

** Measured on a constant foreign exchange basis

The unfavourable foreign exchange movement (primarily USD and currencies tied to USD) reduced growth in operating profit from ordinary activities by EUR 40 million.

Net Profit from Ordinary Activities

Financial expense from ordinary activities totalled EUR 173 million, comprising EUR 165 million of finance charges (average borrowing cost of about 5% compared to an initial guidance of 4.5%), as well as the amortisation of bank commissions for the funding arrangement for EUR 7 million.

At 31 December 2006, Pernod Ricard's debt was EUR 6,803 million, a EUR 452 million increase, due to the payment of a EUR 545 million tax liability upon the disposal of Dunkin'Brands carried out during the previous financial year. Excluding this tax payment, debt decreased by EUR 93 million over the 1st half of the current financial year, after the payment of the EUR 228 million cash dividend. This debt takes into account a high level of trade receivables at 31 December 2006, due to sales seasonal fluctuations: their collection at the beginning of this year will enable the Group to reduce net debt in the 2nd half-year.

The tax charge on ordinary activities was EUR 170 million, representing an average rate of 23.9% in line with expectations. The lack of contribution to the half-year profits from operations sold should also be noted (EUR 42 million in the 2005/2006 1st half-year). Finally minority interests remained stable from one financial year to the other at EUR 14 million.

Net profit from ordinary activities recorded an outstanding 18% growth on a constant exchange rate basis to EUR 529 million, compared to the 2005/2006 1st half-year, despite the disposal of Dunkin'Brands.

Other items

Loss from other operating income and expenses was close to breakeven at EUR 21 million. Gains from asset disposals of EUR 11 million (Rich & Rare, Canadian Club...) partly offset other charges incurred in the half year, primarily related to the Allied Domecq integration. In addition, other financial items totalled EUR 5 million and the tax charge on other items was EUR 13 million. In total, other items thus represent EUR 29 million charge, compared to EUR 17 million profit in the first half of the previous year.