Shift to premium spirits helps Remy overcome lockdowns in China

  • 2021/22 current operating income up 39.9% vs forecast 38.6%
  • Expects another year of strong growth in 2022/23
  • Still on target for double-digit organic sales growth in the first quarter – CEO

PARIS, June 2 (Reuters) – France’s Rémy Cointreau (RCOP.PA) predicted a strong start to its new financial year on Thursday, with strong demand for its premium spirits helping to offset inflationary pressures and the impact of market lockdowns. COVID in China.

Cognac maker Remy Martin and Cointreau liqueur made upbeat comments after reporting higher-than-expected operating profit growth for its fiscal year ending March 31.

“Building on our progress against our strategic objectives, new consumer trends and our solid pricing power, we are entering 2022-23 with confidence,” Chief Executive Eric Vallat said in a statement.

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The pandemic has helped Remy shift to more expensive spirits in the long term to boost its profit margins, accelerating a shift to premium beverages, home drinking, cocktails and e-commerce.

Vallat told reporters that for the new financial year Remy expected “solid profitable growth” as price increases and cost control would help ease inflationary pressures.

In the short term, Vallat said: “I can confirm that we expect double-digit organic sales growth in the first quarter despite the containment in China and high comparables.”

With China representing 15 to 20% of the group’s sales, growth would be driven by demand from other regions, particularly the United States.

Strong demand for its premium cognac in China and the United States, along with tight cost management, drove the company’s 2021/22 organic operating profit up 39.9% to $334.4 million. euros (356.3 million dollars), exceeding the 38.6% forecast by analysts.

Showing his confidence, Rémy indicated that he would pay shareholders an ordinary dividend of 1.85 euro per share in cash and an exceptional dividend of 1 euro.

“Remy is heading for another year of strong growth and improved margins, driven by its strong pricing power, suggesting consensus organic EBIT upside of +10%,” analysts said. Credit Suisse in a note.

Rémy Cointreau shares jumped more than 3% at the start of the session, before returning some gains.

The company reiterated its 2030 targets for a gross margin of 72% and an operating margin of 33%. This compares to the 68.6% and 25.5% achieved respectively in 2021/22.

($1 = 0.9385 euros)

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Reporting by Dominique Vidalon Editing by Sherry Jacob-Phillips and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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