By Cristina Roca
Elliott Management Corp. (ELLA.XX) said Friday that the financial targets of Pernod Ricard could be more ambitious, after the spirits maker set out fresh mid-term guidance yesterday during half-year earnings reporting.
The U.S. activist fund, which late last year disclosed that it had built a stake in Pernod, has been pushing for changes to the company's operational strategy and governance, saying it lags behind peers such as Diageo.
Elliott said on Friday that Pernod's new plan "is a first small step in starting to address the company's shortcomings in operational efficiency."
Pernod, the owner of Absolut vodka, raised its full-year operating profit guidance yesterday and said that as part of its mid-term plan, it will target sales growth of 4%-7% between fiscal 2019 and 2021.
It will also increase its operating leverage by 50 to 60 basis points per year between fiscal 2019 and 2021 and gradually increase its dividend distribution to around 50% of profit from recurring operations by fiscal 2020, up from a distribution of 41% for fiscal 2018, it said.
In an interview with the Wall Street Journal published Thursday, Pernod Chief Executive Alexandre Ricard hit back at Elliott, saying the business is going in the right direction.
However on Friday, Elliott said that it believes these targets could go further, and that the steps proposed by Pernod lack specificity and clarity. "Necessary enhancements to the company's board and corporate governance have yet to be addressed," the activist investor said.
Write to Cristina Roca at firstname.lastname@example.org; @_cristinaroca