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Pernod Ricard has brushed off another attack on its financial governance from activist investor Elliott Management Corp.

Pernod Ricard released its half-year results earlier this week

Pernod Ricard released its half-year results earlier this week

In a statement today, Elliott criticised a new three-year plan from Pernod to boost savings and increase margins. Elliott said the plan, announced after the group's half-year results this week, was "modest" and "could be more ambitious".

Elliott also said the proposal lacked "specificity and clarity". The group repeated an earlier call for board changes.

A spokesperson for Pernod said the company has "taken note" of Elliott's comments. The spokesperson added the group remains focused on executing its three-year plan.

Today's criticism follows Elliott's initial public attack on the group's financial governance in December. Elliott, an activist investor group that has built up a 2.5% stake in the Jameson and Absolut owner, accused Pernod of underperforming rivals and having "an environment of inadequate corporate governance".

In response, Pernod has maintained that it is holding "regular dialogue" with its shareholders while defending its financial record and business structure. Last month, the company promoted one of its independent directors to a new leading role in the boardroom, however, it said the move had been planned for some time.

Elliott's latest criticism of Pernod is based around the spirits group's new plan to target EUR100m in cost savings and increase margins by half-a-percentage point per year to fiscal-2021. Elliott said the margin improvement is "almost entirely" driven by the cost savings instead of through operating leverage. In December, Elliott accused Pernod of lagging the operating margins of its main spirits rivals such as Diageo.

GlobalData figures show that Pernod's operating margin has fallen short of Diageo's over the past five years. However, apart from a blip in 2015, the gap has remained consistent at about five percentage points.

Pernod Ricard vs Diageo Operating Margin 2013-2018

Source: GlobalData


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