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Pernod Ricard profits slip as next-gen takes helm

French drinks group Pernod Ricard is back in the hands of a family member with the appointment of Alexandre Ricard, who has been appointed chief executive and chairman – a role he has been groomed for over the past three years.

French drinks group Pernod Ricard is back in the hands of a family member with the appointment of Alexandre Ricard, who has been appointed chief executive and chairman – a role he has been groomed for over the past three years.

His appointment comes as the company posted lacklustre first-half operating profit due to sluggish sales in its two largest markets.

Ricard became head of Pernod Ricard at a board meeting on Wednesday. His preparation for the role began over two years ago, when the company announced that he would succeed non-family chief executive Pierre Pringuet – the firm hasn't been run by a family member since 2008, when Patrick Ricard, stepped down from the chief executive role. 

Patrick, who was Ricard’s uncle, remained chairman until his sudden death in 2012.

Speaking on the first half results, Ricard commented: “I fully embrace this goal. Our decentralised organisation and premiumisation strategy will remain the assets of our model. Excellence in execution every market will be key to win the battle of top-line growth.”

The 40-year-old family business revealed on Thursday that net profit has fallen by 5% to €795 million, stifled by the Chinese government’s crackdown on luxury gift giving and the struggling US vodka market.

Stakeholders hope that the appointment of Alexandre Ricard, grandson of Pernod Ricard cofounder Paul Ricard, will help to improve the company’s financial results, which showed organic sales growth of just 1% to €4.62bn.

Ricard said: “Our results are solid and in line with the guidance given in October. Our sales are gradually improving despite an environment that remains challenging.”

The next-gen predicts a rise of between 1% and 3% in operating profit for the year ending June 2015, while suggesting that both the US and Chinese markets are likely to see some recovery.

Like other vodka producers Pernod Ricard has been struggling to deal with changing consumer appetites, which in the US are moving from vodka towards brown spirits like whisky.

As a result, Pernod Ricard saw vodka sales fall by 6% in North America but offset some of their cost after Jameson whiskey and Martell cognac saw 4% growth.

The Chinese market has also declined, following a government crackdown on luxury gift giving to officials – a common practice for those looking to curry favour – causing premium spirit sales to fall 16% in the first half of the year.

Ricard believes the upcoming Chinese New Year, which begins February 19, will provide a clearer picture of the market conditions for the coming 6 months, depending on the demand for premium cognac and whiskey.

Pernod Ricard recorded operating profits for the period of €1.36 billion, broadly in line with profits from the previous year and with analysts expectations.


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