Pernod CEO says acquisitions are off the agenda
French spirits group Pernod Ricard on 17 February 2011 reported a 10 percent rise in first-half 2011 net profit (ended 31December 2010) to EUR 666 million (USD 903.4 million) against a year-ago profit of EUR 648 million. First-half sales for the group rose 13 percent to EUR 4.28 billion, lifted by strong growth in emerging markets, an improvement in Europe and a gradual recovery in the United States. However, Pernod Ricard’s share price fell 4.3 percent to EUR 67.61 as Pernod Ricard had missed analysts’ profits estimates. Too bad.
A few days later, on 23 February 2011, CEO Pierre Pringuet was quoted as saying that mergers and acquisitions were not foremost on his mind in the short-term. Instead the French group would focus on reducing debt and growing organically in rebounding markets around the world.
That statement was widely interpreted as a sign that Pernod Ricard was not interested in buying Remy Cointreau’s loss-making Charles Heidsieck and Piper-Heidsieck champagne business which was put up for sale in November 2010.
But Mr Pringuet would not comment on any possible bid for Fortune Brands’ spirits business (Jim Beam whiskey and Sauza tequila) to be separated from the group’s golf and home goods units later this year.
Pernod Ricard said it cut its debt by EUR 864 million to EUR 9.72 billion in its first half 2011. Its net debt to EBITDA ratio now stands at 4.5 times. It should come down to 4 x EBITDA by June 2012.
Pernod increased its debt load with the cash purchase of Absolut vodka maker Vin & Sprit for EUR 5.7 billion in 2008, and late last year completed a sell-off process of smaller wine and spirits brands to raise around EUR 1.0 billion.
