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  • 7.5 %
    Share capital 31/03/2017
  • 2,206 EUR M
    Value of the stake 31/03/2017
  • 10.2 %
    Voting rights 31/03/2017
  • 2
    Number of representatives in statutory bodies 31/03/2017
Investment Year 2006 Investment history

Since its inception in 1975, Pernod Ricard has built up the most premium portfolio in the industry and has become the world co-leader in the Wine & Spirits market through significant organic growth and numerous acquisitions, including Seagram in 2001, Allied Domecq in 2005 and Vin & Spirit in 2008. This portfolio includes in particular 13 strategic international brands, 15 strategic local brands and 4 premium wine brands, produced and distributed by the group through its own worldwide distribution network.

 

Investment case

The spirits market is supported by favourable long-term trends, in particular:

  • expanding urban population
  • growing market share compared to beer and wine
  • upmarket move by consumers

Pernod Ricard has a solid growth and profitability profile:

  • global co-leader with one of the industry’s most complete brand portfolios
  • systematic upmarket move thanks to its superior-quality and innovative products
  • numerous high-potential brands such as Jameson, Absolut and the Indian whiskies
  • leading positions in categories such as whiskey, rum and luxury Cognac that outperform the market and enjoy high barriers to entry, for example guarantee of origin requirements and the need to set aside stocks for ageing

Performance in 2015-2016

Pernod Ricard delivered strong results in a still challenging macroeconomic environment. In organic terms, turnover and current operating income increased by 1.8% and 2.1% respectively, while the currency effect was negligible. The operating margin was stable at 26.2%, with control over advertising expenditure and structural expenses offsetting a slight drop in the gross margin associated with the growth in Indian whiskies. The current net income, group’s share, increased by 3.9%. Net debt was down at EUR 8,716 million, thanks to strong cash flow generation, while the net financial debt/EBITDA ratio also fell to 3.4x.

Outlook

The first half of the 2016-2017 financial year showed organic growth in terms of turnover and operating income of 4% (3% after adjusting for the early date of the Chinese New Year). Growth is positive in all of the group’s regions and this confirms a gradual improvement, albeit in what continues to be a mixed environment.
For the full financial year 2016-2017, Pernod Ricard is projecting continued good performance in the United States, of Jameson as well as ongoing innovation and an improvement in China of Absolut and Chivas. A temporary slowdown is expected in India due to the government’s decision to demonetise. Moreover, the company remains focused on the operating margin and cash flow generation. It has confirmed its target of organic growth in current operating income between 2% and 4%.

Governance

Board of Directors (2/14*) Strategic Committee (1/6*) Audit Committee (1/3*) Compensation Committee (1/5*)
Member Member Member
Member Member
* Number of GBL's representatives in statutory bodies in relation to the total number of members