Rémy Cointreau said that its first-half core profit will fall less than expected after the company posted a broader recovery in second-quarter sales, powered by robust demand for its premium cognac in the United States and China.
Demand was buoyed by customers staying at home in the United States, and by a recovery in China during the country's mid-autumn celebrations, which partly offset a slump in travel retail sales triggered by the coronavirus outbreak.
Second-quarter sales at Rémy Cointreau reached €280.8 million, down 4% at constant exchange rates and excluding the effect of acquisitions or disposals.
Quarterly numbers for the maker of Rémy Martin cognac and Cointreau liqueur, however, came in better than market expectations of a 5.9% fall in the second quarter, and followed a 33.2% sales decline in the first quarter.
Cognac sales, which comprise 74% of group sales, fell 2.5% in the quarter, slower than the 4.9% decline forecast.
The Paris-based spirits maker now expects current operating profit for the six months ended September 30 to be down 25% to 30% on a like-for-like basis, compared with a drop of 35% to 40% forecast in July.
Both the U.S. and Mainland China saw double-digit sales growth in the second quarter, with Rémy Martin cognac and Scottish single malt whiskies in strong demand.
In the U.S, Rémy Cointreau brands continued to grow ahead of the market in the quarter, thanks to "impressive uptrading consumption patterns, strong appetite for legacy brands, buoyant at-home cocktail trends and robust e-retail," the group said .
US, China Recovery
Despite an uncertain economic and health environment, Rémy Cointreau reiterated that its second half should continue to benefit from a strong recovery driven by the United States and Mainland China, its two key markets.
By 0705 GMT, Rémy Cointreau shares gained 1.4% at €159.60, extending gains of 44% so far this year.
"The worst appears to be behind and H2 should improve with shipment catch-up and benefit of pricing," Jefferies analysts said in a note.
"Whilst positive sentiment around recovery in China and strong US off-trade will likely dominate the narrative, we see much of the good news both in the near term and longer term priced in," they added.