Rémy Cointreau 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.
The maker of Rémy Martin cognac and Cointreau liqueur said its business in China 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 Paris-based group said its current year through March 2023 would be another year of strong growth and improvement in its current operating margin, as price increases and strict cost control would mitigate inflationary pressures.
Higher-Priced Spirits
The pandemic has helped Rémy 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.
Rémy Cointreau reported a rise of 27% in organic or self-generated sales to €409.9 million in the three months ended June 30, versus a forecast of 19.1% seen in a company-compiled poll of 20 analysts.
"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 Rémy 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, Rémy Cointreau said it enjoyed sustained demand for its high-end and mid-range cognacs, Louis XIII, Rémy Martin XO and 1738 Accord Royal.
It also benefited from restocking as the fourth quarter of 2021-22 was marked by a decision to manage strategic inventories.
China Lockdowns
Sales in China were temporarily 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. Overall global inventory level remained "extremely healthy", it said.
For the full year 2022/23 Rémy 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 previously.
Read More: Rémy Cointreau Upbeat As Annual Profit Beats Estimates
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