French spirits group Rémy Cointreau has predicted that sales would remain stable in financial year 2023-2024, reflecting weak US demand in the first half but a recovery in China, disappointing investors who drove its shares down as much as 8%.
The maker of Rémy Martin cognac and Cointreau liquor said on Friday group sales would "strongly decline" in the six months ending 30 September due to a sharp decline in the United States and high comparisons.
A recovery would however 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-19 pandemic Rémy Cointreau and its rivals benefited from people drinking more expensive types of alcohol at home.
There have been, however, signs the spirits industry growth is stabilising, notably in the United States, as positive effects from the pandemic fizzle out.
By 07:14 GMT, Rémy Cointreau shares were down 5.3% at €168.3, after falling as much as 8% in early dealings.
'Weaker Than Expected' Outlook
'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, Rémy Cointreau confirmed a forecast for strong organic growth in current operating profit as it reported sales growth above expectations. Rémy 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.
Group sales were €1.54 billion ($1.70 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.
The cognac division, which makes the bulk of sales and profits, reported sales growth of 7.6%.