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  • 7.49%
    Share capital 30/09/2018
  • 2,811 EUR M
    Value of the stake 30/09/2018
  • 11.82%
    Voting rights 30/09/2018
  • 2
    Number of representatives in statutory bodies 30/09/2018
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’s number two player in the Wine & Spirits market through organic growth and acquisitions, including Seagram in 2001, Allied Domecq in 2005 and Vin&Spirit in 2008. This portfolio includes notably 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.

 

Performance in 2017

In 2016/17, Pernod Ricard delivered a strong year with business accelerating, and is on track to deliver mid-term roadmap. The organic top line growth has reached 3.6%, getting closer to the mid-term objective of + 4% to + 5%. The profit from recurring operations (PRO) recorded a solid organic growth: + 3.3%, at the higher end of the annual guidance bracket of + 2% to + 4%, despite unexpected regulatory changes in India. The operating margin was up by 35bps thanks to foreign exchange impacts. The group’s share of net profit was up 13%, whilst cash flow generation and deleveraging improved significantly. Free cash flow increased by 22%, and 61% in two years, to historic high, supported by operational efficiency initiatives.

Deleveraging was significant with net debt/EBITDA ratio at 3.0x down 0.4x vs. FY16, and net debt down by EUR 0.9 billion to EUR 7.9 billion.

Furthermore, in 2016/17, there was:

  • an increase in profit from recurring operations of 8% in the Americas, 1% in Asia/Rest of World and 1% in Europe;
  • an improvement of the gross margin (+ 4%): the mix turned positive (mainly due to Jameson and Martell), pricing was still muted and costs of goods sold were tightly managed thanks to operational efficiency initiatives;
  • a dividend per share of EUR 2.02, a 7% increase compared with the previous year. This represents a pay-out ratio of 36%, in line with the customary policy of cash distribution of approximately one-third of the group’s net profit from recurring operations.

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 smooth growth and profitability profile:

  • Number two player worldwide 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
  • Leading positions in categories such as whisky, rum and cognac

Governance

Strategic Committee (1/6*) Board of Directors (2/14*) Audit Committee (1/3*) Compensation Committee (1/4*)
Member Member Member
Member Member
* Number of GBL's representatives in statutory bodies in relation to the total number of members. Governance information is dated 31/12/2017, except where superseded by more recent public disclosures.