Rémy Cointreau has kept its full-year forecasts – albeit for lower sales and margins – amid a first-half plunge in profits.
The French spirits group reported a 49.5% fall in net profit to €113m ($123.3m) for the six months to the end of September.
The Louis XIII Cognac brand owner booked a 46.4% drop in operating profit to €169.1m. Rémy Cointreau also provides a metric of “current operating profit”, which slid 47% to €169.1m and by down 43% on an organic basis.
The Cointreau liqueurs maker has resorted to “cost-saving” measures in order to improve its profitability after seeing a decline in demand for its premium-priced spirits. It stated that it has cut costs by about €25m in the first half.
Last month, Rémy Cointreau announced it expects full-year sales to drop by 15-20% and a “contained organic decrease” in its current operating profit margin. The company maintained those forecasts today.
CEO Eric Vallat said: “Our half-year results were heavily impacted by developments in the US market, which has faced cyclical headwinds including high inventories linked to a sharp normalisation of consumption, an unprecedented promotional environment, and rising interest rates.
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“Against this backdrop, we are staying the course, convinced that our value-driven strategy remains underpinned by favourable medium- and long-term trends. This is why we opted to implement cost-cutting measures to mitigate short-term effects.”
Vallat added the group is taking a “much longer-term view” going forward.
The Bruichladdich whisky distiller reiterated its view that its US market will only return to growth in its fiscal 2025 and that China sales will grow at a slow pace.
Rémy Cointreau’s first-half sales slid 26.6% to €636.7m. On an organic basis, sales were down 22.2%.
In a note to clients today, analysts at AllianceBernstein described Rémy Cointreau’s first-half profits as “very weak but no worse than expected”.
Rémy Cointreau’s shares, down more than 30% so far in 2023, were up 0.74% on the day at €109.35 at 12:17 CET.