PARIS--(BUSINESS WIRE)--Regulatory News:
Rémy Cointreau (Paris:RCO) generated consolidated sales of €257.5 million in the first quarter of 2023-2024, down -35.0% on an organic basis (+14.3% compared to Q1 2019-20). On a reported basis, the decline was -37.2%, including a negative currency effect of -2.2%.
This performance reflects an exceptionally high basis of comparison (Q1 2022-23 was up +74.0% compared to Q1 2019-20), the Group’s focus on significantly reducing its Cognac inventories in the United States, and continued normalization of consumption in the US.
Against this backdrop, the Cognac division saw sales retreat -44.7% on an organic basis. The Liqueurs & Spirits division reported a decline, with sales down -11.4% on an organic basis. The latter is affected by a phasing effect and a high basis of comparison, while underlying trends remained solid, allowing a return to growth from the 2nd quarter.
In the Americas, sales suffered a marked decline, while in APAC they rose very steeply, boosted by trends in China and Southeast Asia, along with the continued recovery in Travel Retail. Lastly, EMEA reported double-digit growth, driven by all of its regional markets.
Breakdown of sales by division: |
|||||
€m (April - June) |
Q1 2023-24 |
Q1 2022-23 |
Change as
|
Organic change |
|
vs. Q1 22-23 |
vs. Q1 19-20 |
||||
Cognac |
155.1 |
292.3 |
-46.9% |
-44.7% |
-4.4% |
Liqueurs & Spirits |
95.0 |
109.7 |
-13.5% |
-11.4% |
+69.7% |
Subtotal: Group Brands |
250.0 |
402.0 |
-37.8% |
-35.6% |
+14.3% |
Partner Brands |
7.5 |
7.9 |
-5.4% |
-4.6% |
+13.9% |
Total |
257.5 |
409.9 |
-37.2% |
-35.0% |
+14.3% |
Cognac
First-quarter sales at the Cognac division were down -44.7% on an organic basis, as expected. This was primarily due to a significant drop in sales in the Americas, hit by the combined impact of an exceptionally high basis of comparison (Q1 2022-23 sales were +175.8% compared to Q1 2019-20), the Group’s focus on significantly reducing inventories, and continued normalization of consumption. In an increasingly promotional environment, the Group maintained its value-driven strategy, holding prices steady.
In APAC, the Chinese market registered another quarter of very strong growth driven by the recovery in on-trade business and a particularly strong performance from Rémy Martin CLUB. It was also driven by robust growth in e-commerce (T-Mall platform and JD.com during the 6.18 Festival), where sales outperformed expectations. In the rest of Asia, particularly Southeast Asian markets, the Cognac division did very well.
In the EMEA region, business was very good in all regional markets, particularly in AME2 and in Western Europe.
Liqueurs & Spirits
First-quarter sales at the Liqueurs & Spirits division were down -11.4% on an organic basis, reflecting phasing effects (distributors built up US inventories at the end of the fourth quarter ahead of price increases on 1 April 2023), as well as a very high basis of comparison in the Americas (Q1 2022-23 sales up +127.2% compared to Q1 2019-20).
The underlying trend in the Americas region is solid and points to very good momentum for the Cointreau brand, which has just launched its new Margarita Right campaign featuring actress Aubrey Plaza. The Group expects to return to growth in the second quarter of 2023-24.
In the EMEA region, sales were very good, reflecting robust trends throughout the region, particularly in Western Europe (Germany, France, and Greece) and the United Kingdom. Lastly, in APAC, the year got off to a good start in the North and Southeast Asia as well as in Travel Retail business.
Partner Brands
First-quarter sales of Partner Brands were down -4.6% on an organic basis.
2023-24 outlook confirmed
In 2023-24, Rémy Cointreau anticipates continued strong normalization of consumption in the United States, although trends will nonetheless remain significantly higher than in 2019-20.
At the same time, the Group expects strong growth in the rest of the world, led by major gains in China, a very good showing in EMEA and the Rest of Asia, and business similar to levels observed in 2019-20 in Travel Retail.
Against this backdrop, the Group expects sales to remain stable on an organic basis in 2023-24, with:
- A strong decline in sales in the first half, reflecting a very strong fall in the United States and high bases for comparison
- A strong recovery in the second half, driven by a sharp rebound in the US starting in the third quarter
Rémy Cointreau intends to confirm its level of organic profitability based on:
- Continued roll-out of a value-driven strategy built on a firm pricing policy and improved price mix
- Resilient gross margin in a persistently inflationary context
- Stabilization of the ratio of marketing and communication spend/sales
- Tight control of overhead costs
The Group estimates that currency will have an unfavorable impact on:
- Sales: between -€50m and -€60m
- COP: between -€10M€ and -€15m
About Rémy Cointreau
All around the world, there are clients seeking exceptional experiences; clients for whom a wide range of terroirs means a variety of flavors. Their exacting standards are proportional to our expertise – the finely-honed skills that we pass down from generation to generation. The time these clients devote to drinking our products is a tribute to all those who have worked to develop them. It is for these Men and Women that Rémy Cointreau, a family-owned French Group, protects its terroirs, cultivates exceptional multi-centenary spirits and undertakes to preserve their eternal modernity. The Group’s portfolio includes 14 singular brands, such as the Rémy Martin and Louis XIII cognacs, and Cointreau liqueur. Rémy Cointreau has a single ambition: becoming the world leader in exceptional spirits. To this end, it relies on the commitment and creativity of its 2,021 employees and on its distribution subsidiaries established in the Group’s strategic markets. Rémy Cointreau is listed on Euronext Paris.
A conference call with investors and analysts will be held today by CFO Luca Marotta, from 9:00am (Paris time).
Related slides will also be available on the website (www.remy-cointreau.com) in the Finance section.
Appendices |
|||||||||||
Q1 2023-24 sales (April-June 2023) |
|||||||||||
€m |
Reported
|
Forex
|
Scope
|
Organic
|
Reported
|
Reported
|
Organic
|
||||
|
A |
|
|
B |
C |
A/C-1 |
B/C-1 |
||||
Cognac |
155.1 |
|
-6.6 |
|
- |
|
161.6 |
292.3 |
-46.9% |
|
-44.7% |
Liqueurs & Spirits |
95.0 |
|
-2.2 |
|
- |
|
97.2 |
109.7 |
-13.5% |
|
-11.4% |
Subtotal: Group Brands |
250.0 |
|
-8.8 |
|
- |
|
258.8 |
402.0 |
-37.8% |
|
-35.6% |
Partner Brands |
7.5 |
|
-0.1 |
|
- |
|
7.6 |
7.9 |
-5.4% |
|
-4.6% |
Total |
257.5 |
|
-8.9 |
|
- |
|
266.4 |
409.9 |
-37.2% |
|
-35.0% |
Regulated information in connection with this press release can be found at www.remy-cointreau.com.
Definitions of alternative performance indicators
Rémy Cointreau’s management process is based on the following alternative performance indicators, selected for planning and reporting purposes. The Group’s management considers that these indicators provide users of the financial statements with useful additional information to help them understand its performance. These indicators should be considered as supplementing those including in the consolidated financial statements and resulting movements.
Organic sales growth:
Organic growth excludes the impact of exchange rate fluctuations, acquisitions and disposals.
The impact of exchange rate fluctuations is calculated by converting sales for the current financial year using average exchange rates from the prior financial year.
For current-year acquisitions, sales of acquired entities are not included in organic growth calculations. For prior-year acquisitions, sales of acquired entities are included in the previous financial year but are only included in current-year organic growth with effect from the actual date of acquisition.
For significant disposals, data is post-application of IFRS 5 (which reclassifies entities disposed of under “Net earnings from discontinued operations” for the current and prior financial year). It thus focuses on Group performance common to both financial years, over which local management has more direct influence.
_________________________
1 All references to “on an organic basis” in this press release refer to sales growth at constant currency and consolidation scope
2 Africa and the Middle East
