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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Pernod Ricard    RI   FR0000120693

PERNOD RICARD

(RI)
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167.175 EUR   -0.31%
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Pernod Ricard Doubles Down on Whiskey -- 2nd Update

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08/29/2019 | 06:49am EDT

By Saabira Chaudhuri

Pernod Ricard SA extended its bet on whiskey, saying it is acquiring the New York-based maker of Jefferson's bourbon and plans to open its first distillery in China.

The maker of Chivas Scotch whisky, Jameson's Irish whiskey and Absolut vodka said it agreed to buy Castle Brands Inc. for $223 million through a cash tender offer. Pernod has beefed up its exposure to American whiskey with a string of recent investments, taking a majority stake in Rabbit Hole bourbon in June and purchasing Texas-based TX whiskey earlier this month.

The world's second-biggest international liquor maker after Diageo PLC is under pressure from hedge fund Elliott Management Corp., a prominent activist investor that has become one of its largest shareholders. Elliott has criticized Pernod's management, saying the company has underperformed its peers and should raise its operating margin.

On Thursday, Pernod nominated two new external directors following criticism from Elliott that its board was too French and insular. It announced a share buyback of up to EUR1 billion ($1.11 billion) and said it was raising its dividend. The company's shares climbed 4.1% Thursday, after Pernod also reported full-year results that beat analyst estimates.

Bourbon has been a high-growth category for spirits makers in recent years, helping companies like Pernod and Diageo offset sluggish demand for less-fashionable categories such as vodka. Sales of U.S. whiskey globally rose 8.7% last year by volume, according to industry tracker IWSR, while bourbon climbed 7%. Vodka volumes declined 2.6% and rum grew 1.7%.

Pernod also said it plans to open a distillery in Emeishan, in China's Sichuan province, that will produce malt whiskey. Pernod's Asia head, Philippe Guettat, said the company is aiming to give a local edge to the drink and plans to appoint a Chinese master distiller.

Asia has been a focus for global alcohol makers as they grapple with declining volumes in the West. On Thursday, Pernod said sales in China jumped 21% last year.

Chinese drinkers, who have favored local spirit Baijiu and cognac, are increasingly driving whiskey sales. Whiskey volumes climbed 11% in China last year, according to IWSR, driven predominantly by Scotch consumption.

Pernod's net profit for the year ended June 30 was EUR1.46 billion, down from EUR1.58 billion a year earlier. On an organic basis -- which strips out currency moves and acquisitions -- operating profit grew 8.7%, beating estimates for an 8% rise. Sales climbed to EUR9.18 billion from EUR8.72 billion.

--Anthony Shevlin contributed to this article.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CASTLE BRANDS INC 0.00% 1.26 Delayed Quote.48.15%
DIAGEO 0.08% 3165 Delayed Quote.13.20%
PERNOD RICARD -0.30% 167.2 Real-time Quote.17.03%
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Financials (EUR)
Sales 2020 9 790 M
EBIT 2020 2 809 M
Net income 2020 1 795 M
Debt 2020 6 527 M
Yield 2020 2,08%
P/E ratio 2020 24,7x
P/E ratio 2021 22,4x
EV / Sales2020 5,19x
EV / Sales2021 4,88x
Capitalization 44 243 M
Chart PERNOD RICARD
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Technical analysis trends PERNOD RICARD
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 174,59  €
Last Close Price 167,70  €
Spread / Highest target 21,6%
Spread / Average Target 4,11%
Spread / Lowest Target -20,1%
EPS Revisions
Managers
NameTitle
Alexandre Ricard Chairman & Chief Executive Officer
Hélène de Tissot Director-Finance & Operations
Frèdèric Andrè Director-Information Technology Governance
Jean-François Bernard Chief Technical Officer
Pierre Pringuet Director
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