Elliott still harbours Pernod Ricard concerns

Activist investor Elliott has kept up the pressure on French spirits group Pernod Ricard, welcoming this week’s first-half results, but calling for boardroom changes and better margins.

Elliott, which has built a stake of just over 2.5% in Pernod Ricard, has called on the family-backed group — which owns Irish whiskey labels Jameson and Powers — to raise profit margins to bring them more into line with British rival Diageo.

Elliott has suggested €500m in cost cuts and options, such as merging with another spirits company.

The hedge fund issued a statement, yesterday, after Pernod’s results this week, when the group raised its profit growth outlook for 2018-2019 and unveiled new margin goals in a three-year strategy plan.

“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,” Elliott said.

Last month, Pernod Ricard took a step towards improving its governance, naming Patricia Barbizet to the newly-created role of lead independent director.

Nevertheless, Elliott made clear it wanted more. “Necessary enhancements to the company’s board and corporate governance have yet to be addressed,” it said.

Elliott has blamed Pernod’s underperformance in part on what it views as poor governance, having highlighted that Pernod’s 15-member board needs more diversity and independence. It said Pernod’s targeted savings of €100m over the next three years was a modest goal for a company its size.


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