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French spirits major Rémy Cointreau's CEO Eric Vallat is upbeat on the progress made in US sales but noted challenges remain.
On an investor call yesterday (28 November), Vallat said: "While the overall US market remains under pressure, a closer analysis of our portfolio performance reveals encouraging signs of recovery, or at least stabilisation."
He added that "the pace of decline" for Cognac in the US slowed in the three months to September, with sales of Rémy Martin down 12% against a 15% dip for the category, which, he said, "reinforces the idea that our pricing policy is correct and we see a continued improvement, while still in a negative territory in Q3".
Despite the positive focus, he stressed the company would "remain realistic about the pace of recovery and short-term challenges, particularly sell-in", adding: "The challenges in the US market are far from over, and the road to stabilisation and recovery will take longer than initially expected."
In its first-half results, the Cointreau liqueur producer booked €533.7m ($563.9m) in sales, down 15.9% organically and 16.2% on a reported basis year-on-year.
Operating profit of €147.3m was 17.6% lower on an organic basis than the corresponding period. Net profit fell 24.2% to €92m.
Cognac sales, which make up 37% of group sales, were down 17.9% and 13% on an organic and reported basis, respectively, in the first-half at €126.5m.
Liqueur and spirits sales dropped 3.3% organically and 1.1% on a reported basis to €30m. The unit makes up 16.5% of the company's sales.
The VSOP brandy maker issued a profit warning in October, lowering its full-year sales outlook after booking a 16.1% organic drop in sales in its second quarter.
Consequently, Rémy Cointreau shifted its sales guidance for the 2024-25 fiscal year to a “double-digit” decline, compared with its previous outlook for a “gradual recovery over the course of the year”.
In its H1 results presentation, the group confirmed its outlook and would expect to book a sales decline of 15-18% for the full year, with "no recovery" expected for the Americas market "before Q4 2024-25 at the earliest".
The group also expects the second half of the year to see "continued sluggish trends" in EMEA, while APAC would see "sequential sales deterioration in H2 vs. H1".
It also introduced the start of a €50m cost-reduction plan, which is intended to offset what it expects to be a “deterioration” in its operating profit margin over the course of the year on an organic basis.