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Rémy Cointreau profit falls as China gives up gifts

Rémy Cointreau profit falls as China gives up gifts.jpg

Rémy Cointreau’s heavy exposure to a slowing Chinese market and a continuing reliance on cognac sales have harmed its financial performance – resulting in a 14.6 per cent like-for-like fall in half-year operating profit.        

The Paris-based maker of Rémy Martin cognac said its operating profit in the six months to September 30 stood at ¢102.1m, down from ¢132.7m during the same period last year. However, the figure was broadly in line with the ¢104m forecast by Bernstein Research. At a group level, Remy’s operating margin was 21.6 per cent compared with 23.8 per cent a year earlier.    

At its all-important Rémy Martin division, operating profits were down 27.7 per cent on a like-for-like basis, to ¢78m, over the half-year period. The operating margin was also down, to 28.2 per cent on a reported basis, compared with 35.5 per cent during the period a year earlier.    

The group said on Thursday the margin decline was “impacted mainly by the destocking effort in Greater China”.    

Rémy has been one of the hardest hit European companies supplying the Chinese market with luxury and high-end products. Its Rémy Martin cognac division accounts for almost 80 per cent of group operating profit while China accounts for almost half group sales.    

Sales have plummeted since the Chinese government clamped down on consumption by officials about 18 months ago, and Rémy has suffered more than most because of its strength in producing the sort of premium cognac associated with gift-giving.    

In September, Valérie Chapoulaud-Floquet, a luxury specialist and a former L’Oréal and Louis Vuitton executive, took over as Rémy’s chief executive, filling the void created in January when Frédéric Pflanz resigned after less than 100 days in the post.    

His abrupt resignation produced unease at a time when falling sales in China started to hit profits. The resignation less than a month later of Patrick Piana, chief executive of the Rémy Martin division, added to the uncertainty.    

On Thursday, Rémy said the global macroeconomic environment continued to be “mixed”, but it stood by its outlook for the full year – confirming its target of achieving organic growth in both sales and operating profit.  

Shares rose 4 per cent in early trading to ¢60.84.    



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