Remy Cointreau Toasts Chinese Cognac Boom

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on April 24 2012 12:58 PM

French spirits group Remy Cointreau expects full-year core profit growth of at least 15-18 percent, thanks to booming demand for premium cognac in Asia and notably China.

The maker of Remy Martin cognac and Cointreau liqueur reported on Tuesday underlying sales growth of 15.6 percent in the 12 months ended March 31, helped also by robust demand in the United States and Russia.

We confirm that we can achieve 15-18 percent current operating profit growth, possibly slightly more, Chief Financial Officer Federic Pflanz told analysts.

The range is below analysts' forecasts for 20-25 percent growth, but they said the company was traditionally cautious and were encouraged strong demand for premium cognac in China, now Remy's biggest market, was not showing any signs of slowing.

Demand in Northern Europe also remained strong, although there was no sign of improvement in austerity-hit Spain and Greece, Pflanz said.

The figures, which followed a strong first-quarter showing at the wines and spirits division of French luxury giant LVMH last week, strengthened the view that the drinks industry has so far escaped economic woes.

By 0915 GMT, Remy shares were up 1.8 percent at 79.84 euros as investors largely shrugged off a well-flagged sales decline in the fourth quarter to focus on the positive outlook.

Asian sales are on a good trend ... We have every reason to believe that Remy Cointreau will pursue its growth momentum in this region, CM-CIC analysts said in a note.

Sales declined 8.3 percent in the fourth quarter, a drop well flagged by the company in January when the early timing of the Chinese New Year had brought forward orders and boosted third-quarter sales.

Remy, which has a market capitalisation of 4 billion euros, competes with spirits makers Pernod Ricard of France and Britain's Diageo.

Full-year revenue reached 1.03 billion euros ($1.4 billion), in line with forecasts in a Thomson Reuters I/B/E/S poll.

The Remy Martin cognac, which makes the bulk of group sales and profits, achieved 25.1 percent underlying growth in the full year, thanks to higher prices and volumes, notably in Asia.

All regions of the world reported growth, primarily driven by Asia and the United States. Key Western markets also recorded growth while the Russian market remained buoyant, Remy said.

Remy Cointreau shares have gained 26 percent this year, sharply outperforming the European sector, which has added 6.9 percent.

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