Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you discuss the organic sales outlook for the second half, particularly in the US, and any innovation plans for the US market? Also, why is the H2 profit growth forecast lower than expected? A: Debra Crew, CEO: We are pleased to be back into growth, with momentum in most regions except China. In the US, we expect continued improvement despite lapping the Crown Royal Blackberry launch, supported by a strong innovation pipeline. The H2 profit forecast considers ongoing investments in digital and higher staff costs, with benefits expected in fiscal '26. Nik Jhangiani, CFO, added that the focus is on driving leverage through the P&L, with some one-off costs impacting the first half.
Q: What are you seeing in US shipments versus sell-out, and can you quantify the tariff impact on profitability? A: Debra Crew, CEO: We are not seeing significant retailer destocking, with depletions and NSV running closely. Nik Jhangiani, CFO, noted a potential $200 million gross exposure on operating profit from tariffs, mainly affecting tequila. They plan to mitigate about 40% of this through inventory management and other strategies, with pricing as a last resort.
Q: How do you plan to improve performance through revenue management and cost savings, and where are the main opportunities for efficiencies? A: Debra Crew, CEO: Opportunities include revenue growth management, promo optimization, and supply chain productivity. Investments in digital and marketing are expected to yield benefits. Nik Jhangiani, CFO, emphasized leveraging shared service centers and optimizing working capital, particularly in inventory and accounts receivable.
Q: What are your views on the US spirits market's structural headwinds, such as alcohol moderation and cannabis? A: Debra Crew, CEO: We see the current challenges as more cyclical than structural. GenZ shows a preference for moderation, but spirits penetration is increasing. Cannabis has not shown a material impact on spirits, and GLP-1 drugs are still early in their impact. We focus on premiumization and small sizes to cater to consumer preferences.
Q: How do you view the sustainability of tequila growth, and what is the pricing environment like? A: Debra Crew, CEO: Don Julio shows strong growth with significant potential due to low household penetration. Casamigos faced challenges but is being repositioned with a focus on execution and pricing strategy. The pricing environment is competitive, especially for Blanco tequila, but our aged variants provide a differentiated portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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