Rémy Cointreau Shares Decline Amid Weaker Outlook

Investing.com – Rémy Cointreau's (EPA:RCOP) shares fell on Friday following a lower full-year outlook and disappointing second-quarter results, signaling ongoing challenges in key markets.

As of 4:18 am (0818 GMT), shares traded down 1.7% to €58.65.

The company downgraded its guidance, anticipating continued double-digit organic sales declines, contrary to earlier expectations for a gradual recovery in fiscal 2025.

Rémy Cointreau now expects a turnaround in the Americas no sooner than Q4, while projecting further sales declines in Asia for the second half of the year. Weak consumer trends in Europe are also projected to continue.

In the second quarter, organic sales dipped 16.1%, missing the consensus estimate of a 15.4% decline.

Total reported sales reached €316.7 million, slightly exceeding the forecast of €316 million but still indicating a tough environment.

First-half organic sales are down 15.9% after a 15.6% drop in Q1, highlighting ongoing challenges.

Citi Research analysts suggest that the combination of these factors may lead to downward adjustments for fiscal 2025 earnings per share (EPS).

Rémy Cointreau’s profitability is expected to shrink, although a cost-cutting initiative exceeding €50 million aims to mitigate some losses. This shift diverges from prior commitments to maintain profitability through high advertising and promotional spending.

Jefferies analysts highlighted that the company's previous strategies to “protect profitability” are being replaced by defensive measures in light of deteriorating market conditions.

In the U.S., the market struggles with inventory destocking, although the depletion rate improved slightly in Q2, it remained below expectations.

In China, sales showed some resilience with a 10% increase in e-commerce, but the overall market continues to face economic uncertainties and challenging year-over-year comparisons.

Expected anti-dumping tariffs on whisky slated for fiscal 2025 are predicted to be minimal, with mitigation plans in place for the next year.

Citi indicated that the full effects of these measures may not be apparent until fiscal 2026, warning of potential FY26 consensus EPS downgrades exceeding 20%.

Cognac sales fell 17.5%, underperforming forecasts, while liqueurs and spirits offered some positive news, with sales in that segment declining 12%, beating both expectations. However, partner brands saw a steep 25% drop, significantly below analyst projections.

The company cautioned that sales might continue to weaken in the latter half of the year, compounding the already visible challenges in the first six months.