F26 Preview - Rebasing The Dividend

Research evidence excerpt

F26 Preview - Rebasing The Dividend

hina - relatively robust....Outside of USA and China, which

declined -12% and -7% in 3Q respectively, the rest of the business (c70% of sales) grew 5% Exhibit 1 - Pernod trading at a current c.35%

(vs 1H broadly stable). 3Q saw improvement in Brazil, India, S.Korea, S Africa, GTR, UK, ROI discount to staples, versus 20Y average of

-4%.amongst others. Whilst Spain shipment boost will reverse in 4Q and GTR will slow given ME RI Premium/Discount to Market

disruption, recovery in other regions is encouraging. 30x 30%

25x 20%

10%

...however US and China still tricky. USA: sell-out trends in F26 will likely finish around -HSD vs 20x15x 0%-10%

-30%sell-in down mid-teens given inventory unwind. For F27, this offers an easy basis of comparison 10x5x -20%

-40%

0x -50%on shipments, which argues for ships and depletes to be more aligned. This delta could be

RI vs. Staples Staples RI 20Y AVG 20Y MAX 20Y MINworth as much as 150bps to F27 org sales. China: similar to the US, sell-out trends remain .

tricky however we would anticipate that the drag from China is less pronounced in F27 vs F26 Source: Jefferies, Factset

as volatility from anti-dumping and anti-extravagance are cycled. This could be worth c.100bps

to growth in F27.

Bottom line - strong focus. We see a continued commitment to protecting the bottom line.

1/3 of the €1bn FY26–FY29 savings are expected in FY26. We would expect a strong focus

on productivities into F27.

Cash and deleveraging. Dividend rebasing: The reduction in our dividend to €2.35 (vs F25

€4.70) helps to accelerate deleveraging by 0.2x per annum. Divi yield is 3.6% after the

downward rebasing. India IPO: we see scope for a potential IPO in India (c.13% of group).