Date: 22nd November, 2010.
I certify that the above coursework is all my own work.
Word Count: net 1988 words
Table of contents
Case Study: Financial performance & SWOT analysis of Pernod Ricard – Global’s premium spirits & wines1 Table of contents2
Financial Ratios Analysis4
Assets management ratios5
Market value and dividend Ratios8
Financial Strategies and direction10
Global Market competition analysis11
SWOT analysis – Pernod Richard13
Appendix 1 (Financial Ratios)15
Appendix 2 (Working of financial ratios calculation)18
Appendix 3 (Peer Median Ratio components)21
Pernod Ricard was born in 1975 out of the link-up of two drinks specialists, Pernod SA and Ricard SA; it was able to take advantages of new resources to develop its Market Companies and its brand portfolio (Ricard, Pernod, Pastis 51, Suze, Dubonnet, etc.) in France and other countries.
The Group has continued its growth with the start-up of operations in Asia and the creation of an extensive, dense market company in Europe over ten years, it has extended its coverage to all the countries of the 15-member European Union, establishing a strong brand presence; nowadays it has expanded its companies in 70 countries.
My research is to analyze & identity the financial problems it facing, make recommendations for them in order to improve Pernod Richard’s financial situation and its competitiveness in the global markets in its future.
The research is based on using benchmarking with different kinds of financial ratios compared to one of its competitor – Diageo & the international peer average ratios under the vertical and horizontal analysis (3 years figures).
The reason of choosing Diageo because it has following characteristics as same as Pernod Richard’s:
-in same international wines & spirits sector
-Same fiscal year end as 30 June
-Have a similar and homogenous product portfolio
-Similar business size and scope
-Close locations and productions process
-Similar Accounting method (Both are Europe-based enterprises)
The biggest motivation of this research is that I wish one day I can work in it (Pernod Ricard) or Diageo, I like their images and reputation. They are so similar to each other! It motivates me to choose them as the entity to research as well.
Financial Ratios Analysis
The group has decreased its current ratio from 1.96 to 1.49 in 2008 to 2009 while Diageo has increased it from 1.56 to 1.76. This is mainly due to the coming of 850 million bonds (issued at 6 December 2006) maturity in 6 June 2011. (Pernod Ricard 09/10 annual report, P.117), it decreased the group’s cash ratio & quick ratio as well even though the cash assets have been increased from 520 million to 701 million in 2009.
The concerning point is the liquidity ratios are low when comparing to Diageo & its industry average figures, especially the industry average cash ratio is as 3 times high (0.54) as its one (0.18) and the industry average quick ratio is about 2.5 times high (1.02) as its one (0.41). All these there liquidity ratios are lower than Diageo and the industry average ratios; therefore it cannot guarantee that the group will be able to satisfy the short-term cash requirement for day-to day operations and investments under the prevailing economies.
| |Pernod Richard |Diageo |Peer Median (Eurofinancials.com, | | | | |2010) | |Financial year’s end dates |30 June 2008...