Comment - Shock and awe at Rémy Cointreau
Rémy Cointreau dampened the investor mood this morning by undershooting profits forecasts.
Analyst consensus on Rémy profits for the year to the end of March was EUR86.9m (US$103.6m), which would have been a clear rise on the EUR86.1m reported a year earlier.
One can understand, then, the disappointment generated by Rémy's statement today that profits came in flat, at EUR86.3m. Rémy also reported a fall in operating profits, to EUR132.5m from EUR151.9m in the previous year.
You could hear the sighs weighing on Rémy's share price, which dropped 2% on the Paris Stock Exchange in early trading.
Most of the gap in operating profits was made up of EU7m in costs relating to job cuts at the company's Piper-Heidsieck Champagne business, which compared against a one-off gain of nearly EUR14m in the previous year, connected to Rémy's departure from the Maxxium distribution venture.
Investors' initial shock appears to have subsided, however. By 15:30 in Paris, Rémy's share price was back to where it began the day, at around EUR43.
Meanwhile, in Asia, the strong momentum for the Rémy Martin Cognac brand has been awe-inspiring. Sales rose by 28% in value for the year and propelled the company to net sales of EUR807.8m, up from EUR714m a year earlier.
Most analysts did not expect Rémy to get anywhere near the EUR800m barrier. Even though sales figures were originally released back in April, the size of the increase has probably helped the company to steady the ship today.
The future is fragile, particularly in Champagne, and uncertainty will linger over the company's ability to maintain momentum in Cognac, but Rémy has proved in the past 12 months that it can operate successfully outside of the Maxxium distribution partnership.
For more on demand for Cognac in China, click here.
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