Remy Cointreau beats sales forecasts, but cognac recovery doubts weigh on shares
Remy Cointreau's First-Quarter Performance and Market Outlook
By Hugo Lhomedet and Emma Rumney
Stronger-Than-Expected Sales Driven by Cognac and Asia-Pacific
July 29 (Reuters) - French spirits group Remy Cointreau reported stronger-than-expected first-quarter sales on Wednesday as growth in its cognac business and solid demand in Asia-Pacific markets outside China helped offset weakness elsewhere.
The maker of Remy Martin reported a 1.3% rise in organic sales to 223.2 million euros ($254.45 million), beating analysts' expectations for a 0.2% increase to 218.8 million euros, according to a company-compiled consensus.
Efforts to Rebuild Growth Amid Market Challenges
Remy is seeking to rebuild growth after a prolonged downturn caused by U.S. distributor destocking and weak demand in China.
Cognac Division Returns to Growth
Its cognac division returned to growth, with organic sales rising 7.7%, well above analysts' expectations for a 1.3% increase, supported by strong momentum in Asia-Pacific markets outside China.
Analyst Reactions and Share Price Impact
The company's shares fell 5.2%, however, as analysts cautioned that the stronger-than-expected performance did not yet signal a sustained recovery in the group's two key cognac markets.
Market Concerns in the U.S. and China
"There are some positive signs, but no recovery yet for cognac in either the U.S. or China," Bernstein analysts said in a note.
"Cognac pricing remains pressured, China is not yet clean, and U.S. distribution adds near-term noise," Barclays analysts said.
Liqueurs and Spirits Division Faces Decline
Sales in the liqueurs and spirits division fell 6.6% organically, compared with expectations for a 1.5% decline, as unfavourable shipment timing in the United States weighed on performance.
Investor Sentiment and Full-Year Targets
Jefferies said the stronger-than-expected cognac performance and unchanged targets should reassure investors, though weakness in liqueurs and spirits and the acceleration needed in the second half could limit upside.
The company maintained its full-year targets.
Additional Information
($1 = 0.8772 euros)
(Reporting by Hugo Lhomedet in Gdansk and Emma Rumney in London; Editing by Matt Scuffham)
