Future looks bright - eventually - for Remy Cointreau - Analysis
Remy Cointreau CEO Valérie Chapoulaud-Floquet will be hoping to oversee a lift in sales in the second half
Analysts have hailed signs of “momentum returning” to Rémy Cointreau after the company announced a 6.1% rise in first-half reported sales to EUR500.7m (US$572.7m).
The figures, released late last week, also include a 5.9% decrease in organic sales for the six months to the end of September, with the top-line affected by “technical factors”, including the company’s exit from the VS Cognac segment, distribution changes and high comparables for the Cointreau brand.
In a subsequent note to clients today, UBS pointed out that this decline eased somewhat in the second quarter to -3.2%, which it said was “overall in line with consensus, but encouragingly included a small beat in the Rémy Martin Cognac division (-0.4% versus consensus -1.9%)”.
It added: “Despite cautious wholesalers, management expects sell-in to get closer to matching sell-out in H2 and believes global inventories are at ‘healthy levels’.”
However, UBS remains cautious for the moment: “We see few potential catalysts until we have more visibility on Chinese consumer trends (and subsequent wholesaler stocking) into Chinese New Year in February 2016.”
Barclays was more positive on the company’s fortunes, citing evidence that Rémy is “successfully rebalancing its business away from over-dependence on China”, with the implementation of its new strategic plan on target. “With Rémy’s Chinese business on track and impressive growth coming from Rémy Martin in the US and Europe, we are increasingly confident that H2 sales momentum will accelerate and that the overall business is capable of returning to mid/high single-digit organic growth rates in F17E and beyond,” Barclays says.
Meanwhile, Bernstein welcomes Rémy’s “very strong” US performance, as well as “signs of hope” in China, despite expectations of organic margin decline on negative operating leverage in China’s Cognac sector – offset by growth in the higher-margin US market. “In H2, the drag from the exit of VS in the US will start to drop out of the numbers and China depletions should be getting slightly better, with shipments probably closer to depletions,” Bernstein says.
“Additionally, price-mix has been strong in the Americas and Europe, which we expect to continue.”
Remy will report its half-year earnings on 26 November.
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