French spirits group Rémy Cointreau has reported a 12.8% increase in organic operating profit in full-year 2020/21, beating analyst estimates, with the company upbeat over prospects for the current fiscal year and beyond.
The company said it had emerged stronger from the COVID-19 crisis, which had accelerated pre-existing trends that supported its push towards higher-priced spirits to boost profit margins.
Sales were up 1.8% on an organic basis, to €1.01 billon, and down 1.4% on a reported basis. Sales in its Cognac division rose by 3.7%, while Liqueurs & Spirits fell 3.2%, it said.
Rémy Cointreau, which plans to buy back up to 1.98% of its equity capital, also handed investors an 85% dividend hike.
It predicted an "excellent" start to its 2021/22 financial year, which started on April 1, and said it had decided to increase its communication investments to support its brands.
A rebound in demand for its premium cognac in China and the United States, a boost from acquisitions, and tight control over costs, lifted organic operating profit at the firm to €236.1 million for the period.
This marked a sharp recovery from a 22% fall in group profit a year earlier due to the impact of the pandemic.
'This performance was driven by strong growth in the gross margin (up 0.8 percentage points on an organic basis) and excellent control of overheads (down 2.4 percentage points on an organic basis),' the company said in a statement. 'The group was thus able to increase its communication investment (up 0.9 percentage points) to support its brands through the recovery.'
Rémy Cointreau reiterated its goal to become a 'global leader in exceptional spirits' while also building a business model more focused on sustainability.
The group said it was confident it would achieve a gross margin of 72% and an operating margin of 33% by 2030.
This would compare with a gross margin of 67.3% and an operating margin of 23.4% achieved in 2020/21.
'For financial year 2021/22, the group is confident in its ability to continue to win market share in the exceptional spirits sector,' it said. 'In particular, the group is anticipating an excellent start to its financial year, underpinned by very favourable base effects, shipment phasing effects, and new, structurally more buoyant consumption trends in the United States.'