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Rémy Cointreau expects its sales to ‘strongly decline’
If further evidence were needed that demand for spirits in the US is slowing to a more sedate rate of growth, it has come from Rémy Cointreau.
Announcing its full-year sales figures today, the French spirits group predicted its comparative sales would “strongly decline” in the six months to the end of September due to a sharp fall in demand in the US and the high comparative growth rate achieved at the same time last year.
For the financial year that has just begun, Rémy predicted that its global sales would remain stable, with a strong recovery in China after the lifting of Covid lockdowns of late last year balancing out weak first-half sales in the US.
However, the company believes that a recovery will follow starting in the autumn, driven by a sharp bounce in demand in the US.
The announcement hit Rémy Cointreau shares, which fell by almost 8% in early dealings in Paris. Nevertheless, they remain more than 11% ahead this year.
“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.
Rémy Cointreau will not issue profit figures for the 12 months to the end of March 2023 until June 2023 but the company forecast for strong organic growth in current operating profit as it unveiled sales growth above expectations.
Sales in 2022-23 were €1,548.5 million, a rise of10.1% on an organic basis on the previous year and 43.6% ahead 2019-20, the previous full year before Covid struck.
The figures slightly exceeded analysts’ estimates. The company said this reflected steep gains from a price mix that improved by 10.1% on steady sales volumes.
Sales rose by 17.9% on a reported basis, including a 7.8% gain from the currency effect.
In the fourth quarter, sales rose by 10.2% on an organic basis. In the US the growth rate slowed to 2.9%.
The Cognac division, which makes up the bulk of sales and profits, achieved sales growth of 7.6% in the year taking demand to 43% above the pre-Covid level.
In China, where Rémy Cointreau leads the market for imported spirits through its Rémy Martin stable of Cognacs, the division “generated very strong growth reflecting a marked rebound in business since February and a multitude of activations celebrating the Chinese New Year”.