FRANCE: Pernod Ricard eyeing fresh disposals
Pernod CEO Pierre Pringuet told journalists in Paris last week that the French wine and spirits giant is pursuing disposals of more peripheral businesses.
Group executives refused to be drawn on which businesses may be sold. Outgoing chief financial officer Emmanuel Babeau added: "All I can say is that we are in discussions." Disposals, he added, would be made in a "discreet" manner.
Speculation has grown that Pernod is looking to offload Spanish vineyards. Pernod owns several Spanish wine brands, one of the most high profile being Campo Viejo. Others include Marques de Arienzo, Siglo, Azpilicueta, Ysios, Viña Alcorta and Palacio de la Vega. None of the wines feature in Pernod's 14-brand priority list.
Comments from the Pernod executive team came shortly before announcing late last week that the firm has completed the sale of its Wild Turkey Bourbon brand to Campari for US$581m in cash, following approval from US and Italian competition authorities.
For Pernod, the move forms a major part of a EUR1bn (US$1.4bn) disposal plan for non-core assets, announced following its purchase of Sweden's Vin & Sprit, owner of Absolut vodka, for EUR5.3bn last year.
Last month, Pernod announced that it had completed a EUR1bn rights issue. "This capital increase is part of a set of measures aimed at strengthening the group's balance sheet together with the EUR1bn non-strategic assets disposal programme now well underway," the company said.
Pernod has said that its focus in the current financial year is to pay down debt. CFO Babeau told journalists last week that debt repayments are progressing "in-line" with the firm's plan.
The drinks giant, which owns brands such as Chivas Regal Scotch whisky and Beefeater gin, said last week that it has seen a "slight lift" in sales during April. But, it added, many markets remain difficult, with destocking in the US and a downturn in travel retail sales causing particular problems.
Commenting on the effects of the economic downturn in 2009, Babeau told just-drinks: "The sector worst hit is duty free." Asked whether this has damaged sales of Absolut, which counts duty free as a major category, he added: "Of course, we have been affected like everyone else."
Pernod said in April that like-for-like sales for the three months to the end of March fell by 12% to EUR1.345bn (US$1.8bn). Net sales, including the acquisition of Vin & Sprit, fell by 2%, compared to the same quarter of 2008.
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