Remy Cointreau SA shares fell after the French distiller reported weaker-than-expected revenue in its fiscal fourth quarter and warned of a significant first-half sales decline in the US this year.
(Bloomberg) — Remy Cointreau SA shares fell after the French distiller reported weaker-than-expected revenue in its fiscal fourth quarter and warned of a significant first-half sales decline in the US this year.
Revenue amounted to €243.8 million ($269 million) in the three months through March, the Paris-based company said Friday. That missed the €257.1 million average estimate of analysts surveyed by Bloomberg.
The shares dropped as much as 9.5% — the biggest intraday decline in three years — in early Paris trading.
For the fiscal year that began in April, Remy said it sees revenue remaining stable on an organic basis, compared with analysts’ estimates for a 7% increase. It added that US sales are expected to fall sharply in the first half, and then rebound strongly in the second.
Chief Financial Officer Luca Marotta told analysts on a conference call that the first quarter in the US “will be very negative,” and that results for the period would be negative at a group level.
“The decline in Q1 will be very visible in the US and bigger than what we experienced in Q4,” Marotta said.
The results underscore slowing US demand for premium spirits amid high inflation and economic uncertainty. At the same time, drinks makers expect the key Chinese market to keep recovering after the country reopened following the end of strict Covid-Zero policies.
What Bloomberg Intelligence Says:
Remy Cointreau prices its matured liquor for long-term growth, yet as demand normalizes in the US this may hamper organic revenue expansion in fiscal 2024, and probably explains why guidance calls for stable organic-sales growth (10.1% in fiscal 2023) vs. analysts’ 7% increase. China’s robust recovery is encouraging, but forecast group earnings growth of 6% is likely to be substantially lowered with marketing spending set to remain high.
— Duncan Fox, BI consumer-products analyst
Remy Cointreau’s Premium-Pricing Strategy Crimps Outlook: React
Consumption of premium spirits, particularly cognac, surged during the pandemic as drinkers in the US and Europe upgraded their high-end booze consumption at home. Now US-driven demand is “normalizing,” Remy said Friday, but will remain above 2019 levels.
Marotta said that Remy’s sales were expected to remain above pre-pandemic levels despite the significant decline expected in US sales.
(Updates with CFO comments in paragraph five, BI analyst)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.