Pernod Sees Stable U.S. Growth as Elliott Challenges Its Performance
(Bloomberg) -- Pernod Ricard SA countered activist investor Elliott Management Corp.’s characterization of the world’s second-largest distiller as a laggard, saying its U.S. growth is in line with the broader market.
Sales are increasing at a rate of about 4 percent in the U.S., the spirits industry’s most profitable market and one where the French company generates about one-fifth of its revenue, Paul Duffy, Pernod Ricard’s regional manager for North America, said on an investor call.
It was the distiller’s first discussion of regional performance since billionaire Paul Singer’s Elliott disclosed a stake in Pernod Ricard Wednesday in an effort to boost returns at the maker of Absolut vodka and Jameson Irish whiskey. Elliott wants the French company to lift profit margins at least to rival Diageo Plc’s levels, saving 500 million euros ($567 million) a year by eliminating back-office duplication, cutting jobs in France and the U.S. and other measures, people familiar with the situation said.
Earlier this week, Diageo North America President Deirdre Mahlan said on a call that the Smirnoff vodka maker is confident it can improve its spirits performance in the U.S. for the remainder of its fiscal year that ends next June.
Distillers have been trying to boost revenue and profit margins by encouraging consumers to buy more expensive spirits like Pernod’s Del Maguey mezcal rather than mass-market brands. More than 70 percent of respondents to survey of wholesalers across most U.S. states indicate that they expect shoppers to be willing to buy spirits at a higher price than six months ago, Morgan Stanley analysts led by Olivier Nicolai wrote in a note.
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