Demand for cognac in Asia lifts Remy profits
FRENCH SPIRITS group Remy Cointreau cheered investors with a special dividend for the second year running after demand for its premium cognac in China lifted profits. It forecast that growth in Asia and America would offset a weaker Europe.
The maker of Remy Martin cognac and Cointreau liqueur said yesterday that, despite uncertainties from the euro crisis, it was confident of generating “steady and profitable growth” in its new financial year to March 2013.
Chief executive Jean Marie Laborde said its optimism was supported by the fact it makes 38 per cent of sales in the buoyant Asia and Pacific region, and that the group continued to show good growth in April and May.
Western Europe, where cash-strapped consumers in austerity hit Greece, Spain and Italy are cutting down spending, accounts for around 20 per cent of group sales.
Luxury goods companies across the world, including spirits makers, have been enjoying strong growth as demand from China’s burgeoning middle classes makes up for tougher European markets.
Pernod Ricard and Diageo, the world’s biggest spirits makers, beat forecasts with strong sales growth in the first three months of 2012.
Mr Laborde said the special dividend did not signal the group was short of growth options, and that while organic expansion remained a priority it had up to €1 billion available for acquisitions.
He predicted the group, which slashed its debt by 43 per cent, would have “no difficulties” further increasing prices.
Remy shares gained 31 per cent this year, outperforming its European sector, which is up 5.5 per cent. Operating profit excluding exceptional items for the year ended March 31st rose 20.2 per cent to €207.7 million on a like-for-like basis, which was above company guidance after sales rose a reported 15.6 per cent. Remy had forecast core profit growth of at least 15-18 per cent, a range that was below analysts’ forecasts of around 22.5 per cent.
Remy’s cognac division, which makes the bulk of group sales and profits, achieved like-for-like operating profit growth of 21.6 per cent, thanks to higher prices, notably in Asia, and robust demand from the US, the travel retail and Russia. – (Reuters)