Elliott Statement on Pernod Ricard
Elliott Advisors (UK) Limited (“Elliott”) released today the following statement on Pernod Ricard (“Pernod”, or the “Company”).
Pernod’s half-year earnings announcement confirmed the strong growth potential and solid financial performance of the Company. It also reflected a first small step in starting to address the Company’s shortcomings in operational efficiency. However, the financial objectives of the newly announced plan could be more ambitious—the target savings of €100 million and the margin step-up of 50-60bps per year over the period FY19-21 represent modest goals for a Company with an EBIT of c. €2.5 billion that operates at close to a 5 percentage points EBIT margin discount to its closest peer. The steps proposed also lack specificity and clarity. For example, the 50-60bps margin improvement target appears almost entirely driven by the €100 million of “additional savings”, rather than actual “operating leverage” as Pernod seems to suggest. In addition, necessary enhancements to the Company’s board and corporate governance have yet to be addressed.
Elliott trusts that Pernod’s management will continue to engage in a mutually constructive dialogue to deliver much needed additional improvements while capturing the strong growth of the Company’s underlying markets.
Elliott Management Corporation manages two multi-strategy funds which combined have approximately $34 billion of assets under management. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest funds of its kind under continuous management. The Elliott funds’ investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, and employees of the firm. Elliott Advisors (UK) Limited is an affiliate of Elliott Management Corporation.
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