The spirits group Rémy Cointreau lowered its objectives on Friday for its 2023-2024 financial year which will end at the end of next March, due to a slower recovery in sales than anticipated in the United States and China and while its figure business fell significantly in the second quarter.
“The deterioration of market conditions, mainly in the United States, leads Rémy Cointreau to update its underlying assumptions for 2023-2024,” the group said in a press release.
In the United States, the resumption of sales growth is now expected during the 2024-2025 financial year, and no longer in the third quarter of the current financial year, explained Rémy Cointreau.
In addition, the group still forecasts sales growth in the Asia-Pacific region in 2023-2024, “but below its initial forecast, given the slower than expected economic recovery in China”.
Rémy Cointreau also expects more moderate growth in the EMEA region, “in a persistent inflationary context”.
Rémy Cointreau forecasts an organic decline in its turnover of between 15% and 20% in 2023-2024, compared to the previous financial year, compared to a stabilization previously expected.
In terms of profitability, the current operating income (ROC) margin should experience a “controlled decline” organically, “thanks to the implementation of a significant cost reduction plan”, particularly in marketing and communication. and at the operational level, indicated Rémy Cointreau. The group previously forecast a stable ROC margin in 2023-2024.
Furthermore, Rémy Cointreau continues to anticipate for the 2023-2024 financial year a negative exchange rate effect of 50 million to 60 million euros on turnover and of 10 million to 15 million euros on ROC.
Despite a degraded environment in the short term, Rémy Cointreau has confirmed its objectives for the 2029-2030 financial year. “Financially, the group is targeting a gross margin of 72% and a current operating margin of 33% (based on 2019-2020 rates and scope),” recalled Rémy Cointreau.
Turnover weighed down by cognac
Rémy Cointreau made these announcements after seeing its turnover decline by 17.1% year-on-year in published data and by 10.8% at constant scope and exchange rates in the second quarter, ended at the end of September, to 379, 2 million euros. The currency effect was negative by 28.9 million euros over the quarter. In the first quarter of 2023-2024, Rémy Cointreau sales reached 257.5 million euros, with a negative currency effect of 8.9 million euros.
In the second quarter, sales of the cognac division, which mainly includes the Rémy Martin brand, fell year-on-year by 24.5% on a reported basis and by 17.8% on an organic basis, to 261 million euros. The turnover of the liqueurs and spirits branch increased over one year by 6.7% in published data and by 12.1% on an organic basis, to 111.7 million euros, thanks to a “strong sales recovery” in the Americas region and “good dynamics in Western Europe and the United Kingdom”.
Sales of partner brands reached 6.4 million euros, compared to 6.6 million euros a year earlier, an organic decline of 1.6%.
According to the consensus established by FactSet, analysts expected on average, for the second quarter, a turnover of 383.9 million euros, including 268 million euros for cognac, 111 million euros for liqueurs and spirits branch and 7 million euros for sales of partner brands.
In the first half of its 2023-2024 financial year, Rémy Cointreau’s sales stood at 636.7 million euros, a year-on-year decrease of 26.6% based on published data and 22.2% on a reported basis. constant exchange rates.
During the first six months of the financial year, the turnover of the cognac division, down organically by 30.1% year-on-year to 416.1 million euros, was “essentially affected by a significant drop sales in North America where the group is aiming to reduce the level of its stocks and faces a normalization of consumption and high promotional intensity.
“In this context, the group’s desire to maintain its value strategy, through a firm pricing policy, contributes to increasing pressure on volumes in the short term,” explained Rémy Cointreau.
This article is originally published on lesechos.fr