• Drinks giant open to more asset sales
  • To focus on cutting debt
  • Sees no slowdown for Cognac in China
Pernod Ricard happy with start to new year

Pernod Ricard happy with start to new year

Pernod Ricard has said it will consider disposing of more drinks assets, but has ruled out acquisitions as it seeks to focus on cutting net debt.

Pernod Ricard's managing director of finance, Gilles Bogaert, said today (7 September) that the drinks giant remains "open to making disposals", despite having completed its project to sell off EUR1bn-worth of non-core brands.

"There is no plan anymore, so it will be on an ad-hoc basis," Bogaert told journalists at the company's results conference in London.

Pernod has sold the Wild Turkey Bourbon brand and Tia Maria, as well as several Spanish wine assets, as part of a plan to streamline its portfolio and reduce debt since acquiring Vin & Sprit, the owner of Absolut vodka, in 2008. There have been intermittent rumours that the group might also sell its Plymouth gin brand, although the speculation has so far come to nothing.

Bogaert said that the group's main focus over the next 12 months will be to continue reducing net debt. This fell by EUR1bn (US$1.29bn) in Pernod's fiscal year to the end of June, helping its net debt to EBITDA ratio to drop below five times.

Pernod's medium-term target is to reduce this ratio to between three and four times. The group has ruled out acquisitions for the next 12 months and will primarily seek to cut debt via cashflow generation, led by anticipated net sales growth.

Bogaert said that the group was "happy" with the beginning of its new fiscal year, which has seen a continuation of positive sales trends in emerging markets.

The group expects sales of Martell Cognac to spearhead net sales increases for several years to come. Bogaert said that China's thirst for premium Cognac had shown no sign of abating, following a 12% increase in net sales for Martell in the 12 months to the end of June.

Last week, Pernod reported net profits up by 1% for its fiscal full-year, to EUR951m. Sales fell by 2% on a reported basis, due to unfavourable currency rates. Like-for-like sales, at the same exchange rates as the previous year, rose by 2%.