Standard & Poor's gives BBB credit rating to Pernod Ricard, cites company's 'excellent' business risk profile, solid free cash flow generation; outlook stable

NEW YORK , April 13, 2012 (press release) – CREDIT RATING: BBB-/Stable/A-3 Country: France

Primary SIC: Wines, brandy,

and brandy

spirits

Mult. CUSIP6: 714264

Credit Rating History:

Local currency Foreign currency

03-Oct-2011 BBB-/A-3 BBB-/A-3

17-Nov-2006 BB+/B BB+/B

Rationale

The ratings on French spirits producer Pernod Ricard S.A. (Pernod) reflect Standard & Poor's Ratings Services' view of its "excellent" business risk profile, which is supported by its No. 2 position in the stable and cash-generative global-branded spirits market, and its solid free cash flow generation. The ratings further factor in our opinion that the group's financial policy is in line with an investment-grade rating. However, our view of Pernod's financial risk profile as "aggressive" continues to constrain the ratings, and reflects a debt-to-EBITDA ratio of more than 4.0x, following a series of transformative and primarily debt-funded acquisitions over the past decade.

S&P base-case operating scenario

We believe that Pernod will continue to deliver sound performances, with mid-to-high single digit organic growth in revenues, and stable EBITDA margins, at least, in 2012.

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