Pernod Ricard to meet activist hedge fund Elliott to improve margins

Spirits company Pernod Ricard is set to meet activist hedge fund Elliott ahead of its earnings report in early February in a move to improve its margins, according to a report on Tuesday.

According to Reuters sources, Ricard could give some directions on margins in its earnings report in February, although it is expected the company will unveil their strategy plan later in 2019.

In a statement, back in December 2018, Elliott said that despite the favourable economic backdrop for spirits companies, Pernod Ricard - which owns Malibu, Absolut vodka, Beefeater gin and a number of other leading brands - had lost market share across key segments and underperformed its peers on “several metrics”.

Elliott added: “Successive operational improvement plans have failed to generate operating leverage, leaving operating margins at a five-percentage point discount to its closest peer, Diageo. Pernod’s M&A track record has also been disappointing with the €6bn acquisition of Absolut in 2008 falling short of expectations.”

Elliott is reportedly hopeful that Ricard will deliver some of the changes it has proposed, including improving investor returns. The hedge fund holds a 2.5% stake in the spirits firm and spent €930m acquiring it.

Elliott called for around €500m cost cuts, cutting links to the Ricard family in the board of directors and for the board to consider merging with other companies.