Remy Cointreau RCOP.PA said it was confident over prospects for its current financial year, after first-quarter sales beat expectations and cognac sales strongly recovered in the key Chinese market in June.
Details
The maker of Remy Martin cognac and Cointreau liqueur said its China business saw a double-digit sales rebound last month, having suffered from COVID lockdowns in April-May, and also benefited from strong demand in Europe and the United States.
The group said its current financial year through March 2023 would be another year of strong sales growth and improvement in its current operating margin, as price increases and strict cost controls would mitigate inflationary pressures.
Finance Chief Luca Marotta told analysts the market consensus for this fiscal year - for organic or self-generated sales growth of 11.2% and operating profit growth of 13.8% - was "fair". For the second quarter alone, Remy Cointreau expected another quarter of double-digit sales growth at group level, he said.
In China, assuming no new lockdowns, sales were expected to grow at a "strong double-digit" rate in the second quarter. Marotta said there would be more visibiliy on China after mid-Autumn festivities in September.
The pandemic has helped Remy Cointreau's long-term drive towards higher-priced spirits to boost profit margins, speeding a shift towards premium drinks, at-home consumption, cocktails and e-commerce.
It reported a rise of 27% in organic sales to €409.9 million in the three months ended June 30, versus a forecast of 19.1% seen in a company-compiled poll.
By 0840 GMT on Tuesday 26 July its shares gained 0.2% at €183.80.
"We believe the comments around the strong double-digit recovery in China in June, and low level of inventories at the end of Q1, bode well for Q2, whilst the benefit of a 3-5% forex upgrade following recent euro weakness should also be taken favourably," Credit Suisse analysts said in a note.
Sales at the Remy Martin division, which makes up the bulk of group profit, rose 31.5% in the quarter to €292.3 million, beating expectations of 22.3% growth.
In the United States, Remy Cointreau said it enjoyed sustained demand for its high-end and mid-range cognacs, Louis XIII, Remy Martin XO and 1738 Accord Royal.
Sales in China were affected by strict lockdown measures until May, but business was boosted by a double-digit resumption in sales in June and excellent growth in e-commerce.
Full Year Forecast
For the full year Remy forecast a positive currency effect with reported sales now seen at between €90 million and 100 million, compared with 70-80 million previously, and current operating profit at 50-60 million compared with 30-40 million.
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