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Pernod Ricard Eyes Margin Improvement In EMEA-LATAM Business

By Publications Checkout
Pernod Ricard Eyes Margin Improvement In EMEA-LATAM Business

Drinks group Pernod Ricard, which is being targeted by activist investor Elliott, said its business in Europe, the Middle East, Africa and Latin America (EMEA/LATAM) was well positioned for "solid top-line growth and margin improvement".

The region, which makes 29% of group sales, achieved first half 2019 sales growth of 3% driven by demand in emerging markets and in spite of signs of weakness in western Europe, Pernod said in slides presented on Tuesday ahead of a conference call on the region.

Strategic Roadmap

The group said it had a "clear strategic roadmap" for the region that entailed driving revenue through innovations and prestige brands, while margins should benefit from measures to cut costs, better advertising and promotion expenses allocation, as well as ongoing organisational changes.

Pernod, which is the world's second-biggest spirits group behind Diageo, is under pressure from New York hedge fund Elliott Management to improve profit margins and corporate governance.

Last month, Pernod said that between now and 2021 it plans to raise group operating profit margin by 50-60 basis points per year, provided it can deliver annual organic sales growth of 4-7%, having achieved 6% growth in the 2017/18 year.

The group is targeting 6-8% organic growth in current operating profit for its 2018/2019 financial year, that ends on 30 June.

News by Reuters, edited by Checkout. Click subscribe to sign up for the Checkout print edition.

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