Pernod Adds To Presence In Whiskeys -- WSJ
30 Août 2019 - 9:02AM
Dow Jones News
By Saabira Chaudhuri
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 30, 2019).
Pernod Ricard SA extended its bet on whiskey with a deal to
acquire the New York-based maker of Jefferson's bourbon and plans
to open its first distillery in China.
The maker of Chivas Scotch whisky, Jameson's Irish whiskey and
Absolut vodka said it agreed to buy Castle Brands Inc. for $223
million through a cash tender offer. Pernod has expanded in
American whiskey with recent investments, taking a majority stake
in Rabbit Hole bourbon in June and purchasing Texas-based TX
whiskey earlier this month.
The world's second-biggest international liquor maker after
Diageo PLC is under pressure from hedge fund Elliott Management
Corp., a prominent activist investor that has become one of its
largest shareholders. Elliott has criticized Pernod's management,
saying the Paris-based company has underperformed its peers and
should raise its operating margin.
On Thursday, Pernod nominated two new external directors
following criticism from Elliott that its board was too homogeneous
and insular. It also announced a share buyback of up to EUR1
billion ($1.11 billion) and said it was raising its dividend.
Pernod shares climbed 3.1%, as the company reported full-year
results that beat analyst estimates.
Bourbon has been a high-growth category for spirits makers in
recent years, helping companies like Pernod and Diageo offset
sluggish demand for less-fashionable categories such as vodka.
Sales of U.S. whiskey globally rose 8.7% by volume last year,
according to industry tracker IWSR, while bourbon climbed 7%. Vodka
volumes declined 2.6% and rum grew 1.7%.
Pernod said it plans to open a distillery in Emeishan, in
China's Sichuan province, that will produce malt whiskey. Pernod's
Asia head, Philippe Guettat, said the company is aiming to give a
local edge to the drink and plans to appoint a Chinese master
distiller.
Asia has been a focus for global alcohol makers as they grapple
with declining volumes in the West. Pernod said its sales in China
rose 21% last year.
Chinese drinkers, who have favored local spirit Baijiu and
cognac, are increasingly contributing to growth in whiskey sales.
Whiskey volumes climbed 11% in China last year, according to IWSR,
driven by Scotch consumption.
Pernod's net profit for the year ended June 30 was EUR1.46
billion, down from EUR1.58 billion a year earlier. On an organic
basis -- which strips out currency moves and acquisitions --
operating profit grew 8.7%, beating estimates for an 8% rise. Sales
climbed to EUR9.18 billion from EUR8.72 billion.
--Anthony Shevlin contributed to this article.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
August 30, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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