Pernod sees annual earnings growth at the top of its forecasts

PARIS (Reuters) – French liquor maker Pernod Ricard, targeted by activist investor Elliott, said it is now expecting annual earnings growth ahead of expectations, despite a slowdown in sales growth. third trimester.

Pernod, owner of the Mumm cellars, Absolut vodka and Martell cognac, said that for its 2019 fiscal year, it was now targeting an organic increase of about 8% in current operating income, at the top of its growth forecasts. from 6 to 8% in February.

Pernod also announced Thursday a turnover of 2.003 billion euros ($ 2.26 billion) as of March 31, up 2.5% on a like-for-like basis, though marking a slowdown from 5.6% growth in the second quarter.

This figure was slightly below the average of badysts, who forecast growth of 2.8%.

Pernod, which had benefited from advances in cognac shipments ahead of the Chinese New Year, announced in February that sales growth would slow in the second half of the year.

The slowdown reflected the management of Martell brandy stocks in China and destocking in the United States.

Second world spirits group, behind Diageo, Pernod is under pressure from the American hedge fund Elliott Management to improve its profit margins and its corporate governance.

"For 2019, in an environment that remains uncertain, our goal is to continue dynamic and diversified growth in our regions and brands," said Alexandre Ricard, CEO of Pernod.

In February, Pernod promised to raise margins and returns for shareholders as part of a three-year strategic plan described by Elliott as a first step.

Elliott partially attributed Pernod's underperformance to what he sees as poor governance. He pointed out that Pernod's 15-member board needed more diversity and independence, as many directors are linked to the Ricard family.

Pernod Ricard said its target for the period 2019-2021 was to raise operating profit margins by 50 to 60 basis points per year, provided that it can generate organic growth in its annual sales from 4 to 7%.

After recording organic sales growth of 6.3% in the first nine months of the current fiscal year, Pernod Ricard said Thursday that it was considering a 50 basis point improvement in its margin operating beneficiary for the entire year.