Jameson parent sets margin targets
Jameson whiskey-owner Pernod Ricard, which is being targeted by US activist investor Elliott, vowed to improve profit margins and shareholders’ returns in a new three-year plan.
Pernod, the world’s second-biggest spirits group behind Diageo, also raised its profit growth outlook for its 2018-2019 financial year after beating first-half operating profit forecasts helped by strong demand for premium cognac in China.
“We had the best first half since 2011. Our performance is accelerating. My priority is to create durable value and I hope this will please all our shareholders,” Alexandre Ricard said.
Ricard also said he had no plans, as suggested by some analysts, to sell the group’s champagne assets, which include Mumm and Perrier-Jouet champagnes.
Unveiling its half-year earnings and sales, it cited the performance of its “strategic international brands”, which include Martell, Jameson, Scotch, gin, and champagne.
It said “improved pricing” was helped by Martell, Seagram’s Indian Whiskies, Chivas, Jameson, and Perrier-Jouet.
Elliott, which has built a stake of just over 2.5% in Pernod, has called on the family-backed group to raise profit margins to bring them more into line with Diageo.
Elliott also wants Pernod to improve corporate governance and has suggested €500m in cost cuts and options such as merging with another spirits company.
Pernod said between now and 2021 it plans to raise its operating profit margin by between 50 basis points to 60 basis points a year, provided it can deliver annual organic sales growth of between 4% to 7%, having achieved 6% growth in the 2017-2018 financial year.
It also announced plans to make €100m in cost savings to drive this margin expansion.
Pernod shares in Paris rose 1.3% to post a gain of 22% in the past year. It is valued at almost €39.2bn.
