By Dominique Vidalon
PARIS -Remy Cointreau is confident demand for its premium cognac in China, the United States and Europe will underpin profit growth this year after the French spirits group beat third-quarter sales forecasts.
The maker of Remy Martin cognac and Cointreau liquor was slightly more cautious, however, on prospects for Chinese New Year celebrations next month due to COVID restrictions, and its shares reversed earlier gains to trade down 1.6% by midday.
“We are optimistic on Chinese New year but a little more cautious than we were two months ago. It will be a solid 2022 Chinese New Year though not the best ever for the industry,” Finance Chief Luca Marotta told analysts.
Remy is banking on its Club cognac in particular to win market share in China, he added.
The pandemic has helped Remy’s drive towards higher-priced spirits to boost profit margins long term, accelerating a shift towards premium drinks, at-home consumption, cocktails and e-commerce.
Group sales for the three months to Dec. 31 came in at 440.5 million euros ($498.1 million), an organic rise of 21%, beating a company-compiled consensus from 18 analysts for a 15.1% rise.
Sales at the Remy Martin cognac division, which makes 90% of group profits, rose 19.4% to 332.7 million euros, also above analysts’ estimates of 14.9%.
The company said the third-quarter performance reflected double-digit sales growth in China, led by Club cognac and strong e-commerce sales during the Singles’ Day online shopping bonanza.
Cognac demand in the United States also remained strong, with high-end brands such as Louis XIII cognac that sells for more than $2,000 a bottle, Remy Martin XO and 1738 Accor Royal outperforming.
For the full 2021/22 year, Remy kept a forecast of “very strong” organic growth in current operating profit and strong organic sales growth, and reiterated it was confident in its ability to outperform the premium spirits market.
Marotta told analysts that consensus forecasts for 2021-22 organic current operating profit growth of 38% and sales growth of 26.5% were “at the right level”.
Due to higher marketing and communication spending and a tougher comparison base in the second half, full-year profits will be driven solely by first-half growth, the group reiterated
The French company’s fiscal year starts on April 1 and ends on March 31.
($1 = 0.8843 euros)