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


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Pernod Ricard : Needs a Return to More Convivial Times -- Heard on the Street

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09/02/2020 | 09:33am EDT

By Stephen Wilmot

Global liquor companies can't completely make up for lost bar sales through Zoom cocktail parties.

Pernod Ricard, which distills Jameson whiskey and Absolut vodka as well as its namesake French aperitif brands, on Wednesday reported a 12% decline in recurring profits for its financial year through 30 June. Like its British rival Diageo, the Paris-based company had a solid start followed by a collapse in sales as the pandemic closed big distribution channels such as bars and airport stores.

The compensating factor was a surge in grocery-store sales as consumers restocked their liquor cabinets. On a call with analysts, Chief Executive Alexandre Ricard, scion of the family that still owns roughly 16% of the company, said lockdown rituals of Zoom drinks and WhatsApp parties were among the "new opportunities" that had emerged this year.

Store-based or online liquor sales have been particularly strong in the U.S., but even there the compensation is only partial, with sales growth at the industry level still tracking below the roughly 4.5% level Pernod expected before the pandemic. The other problem for liquor companies is that Americans are buying more of their liquor in superstores, where it earns a lower margin on sales, as they try to avoid multiple shopping trips.

That means the big question for Pernod, as for so much of the corporate economy, is when the world gets back to normal. The company was unwilling to hazard a guess, giving no guidance for the financial year it has just started. Mr. Ricard expects travel retail to remain depressed and the mainstream retail channel to remain strong, implying little change to the status quo.

Pernod shares are down 9% this year, but on 25 times prospective earnings -- the highest in at least 30 years -- they don't look like a bargain given the vast uncertainties around the recovery. These include not just how long it will take for consumers to return to bars and airports, but also whether a recession will make them more cautious about buying $30 bottles of alcohol as the novelty of boozing in front of a computer screen wears off.

Investors who see the correction as an opportunity to buy into a well-run company with some excellent brands need to take the long view. Pernod, whose hard-to-translate corporate tagline is "créateurs de convivialité," is much better off than its clients in the hospitality industry. To thrive, though, it too needs more convivial times.

Write to Stephen Wilmot at stephen.wilmot@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
DIAGEO PLC 1.47% 2628.5 Delayed Quote.-17.87%
PERNOD RICARD 0.99% 147.9 Real-time Quote.-7.21%
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Sales 2021 8 393 M 9 955 M 9 955 M
Net income 2021 1 391 M 1 650 M 1 650 M
Net Debt 2021 7 706 M 9 140 M 9 140 M
P/E ratio 2021 27,0x
Yield 2021 1,87%
Capitalization 38 732 M 45 847 M 45 939 M
EV / Sales 2021 5,53x
EV / Sales 2022 5,05x
Nbr of Employees 18 776
Free-Float 72,0%
Duration : Period :
Pernod Ricard Technical Analysis Chart | MarketScreener
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Technical analysis trends PERNOD RICARD
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 152,57 €
Last Close Price 147,90 €
Spread / Highest target 21,0%
Spread / Average Target 3,16%
Spread / Lowest Target -25,6%
EPS Revisions
Alexandre Ricard Chairman & Chief Executive Officer
Hélène de Tissot Director-Finance & Operations
Frèdèric Andrè Director-Information Technology Governance
Jean-François Bernard Chief Technical Officer
Wolfgang Colberg Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
PERNOD RICARD-7.21%45 847
DIAGEO PLC-17.87%78 556
THAI BEVERAGE-34.83%10 740