French spirits group Remy Cointreau has predicted flat organic sales in financial year 2023-2024, reflecting weak US demand, disappointing investors who drove its shares down as much as 8%.
Details
The maker of Remy Martin cognac and Cointreau liquor warned that group sales would "strongly decline" in the six months ending 30 September due to a sharp fall in demand from the United States and high comparisons.
A recovery would follow in the second half, driven by a sharp bounce in the United States, starting in the third quarter, the company said in a statement.
During the COVID pandemic, Remy Cointreau and rivals such as Pernod Ricard benefitted from people drinking more expensive types of alcohol at home. There have been, however, signs the spirits industry growth is slowing, notably in the United States, as positive effects from the pandemic fizzle out.
"FY 2023/24 will be a more moderate year after two outstanding years and very unbalanced between the first half and the second half," finance chief Luca Marotta told analysts.
"Overall we target for FY 23/24 a flat year for top line and bottom line organically," he said, adding the first quarter would be "very, very negative" in the United States.
"The outlook for FY 24 is much weaker than expected...the outlook is for "stable" organic sales growth in FY24 compared to consensus 6% growth," Bernstein analysts said in a note.
For the 2022-2023 fiscal year that ended 31 March, Remy Cointreau confirmed a forecast for strong organic growth in current operating profit as it reported sales growth above expectations. Remy Cointreau reports its annual profits in June.
It said the profit performance will reflect a sizeable improvement in gross margin despite inflation, increased investment in marketing and communications in the second half and cost control.
Marotta said he was comfortable with analysts' expectations of a 13-14% organic rise in 2022/23 current operating profit and "may do a little bit better".
Group sales were €1.54 billion, marking an organic rise of 10.1%, that slightly beat a company-compiled consensus 9.9% growth, with a marked recovery in business in China since February after the lifting of COVID restrictions.
Cognac Division Sales Growth
The cognac division, which makes the bulk of sales and profits, reported sales growth of 7.6%.
Read More: Remy Cointreau's Sales Fall Less Than Feared As China Offsets US Decline
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