Pernod Ricard could make further acquisitions and brand disposals – MD
Pernod Ricard [EPA:RI] will “keep on actively managing its brand portfolio”, which would include making further acquisitions and asset disposals, MD Finance & Operations Gilles Bogaert told this news service on the sidelines of the company’s 2016/2017 half year sales and results presentation in Paris on 9 February.
The company could make bolt-on acquisitions of strategic beverage brands with a “modest” size, he said, without elaborating.
The company debt burden leaves limited room for manoeuvre on potential large deals, this news service reported in September 2016. As of 31 December 2016, Pernod Ricard’s net debt stood at EUR 8.9bn, implying a net debt/EBITDA ratio below 3.4x, according to the company’s half-year financial documentation. In December 2015, the company’s net debt/EBITDA ratio stood just below 3.6x.
The company’s cash and cash equivalents position increased by 39% to EUR 728m on 31 December 2016.
Following its recent acquisition of a majority stake in West Virginia-based distiller and bourbon producer Smooth Ambler Spirits Co., Pernod Ricard will keep on exploring the US market, Bogaert said.
The US is an important geography for Pernod Ricard, as the local market is showing interesting growth and “premiumization” trends, CEO Alexandre Ricard said during the results presentation.
During 2H16, the company’s sales in the US grew by 5%, while its overall sales worldwide registered a 4% organic growth. Pernod Ricard posted sales of EUR 5.1bn for the first half of FY16/17.
Potential asset disposals
Disposals of non-core brands could also be on the cards, Bogaert said, declining to specify further.
Likely disposal candidates would include small local brands, a Paris-based sector analyst covering the stock suggested. Pernod Ricard could be interested in selling its Czech digestif producer Becherovka, the analyst said, adding that this unit has been rumoured to be a sale candidate in the past.
In December 2016, Pernod Ricard sold its Domecq brandies and wines business to Bodega Las Copas. In September 2016, the company sold Fris Vodka to Sazerac.