Remy Cointreau Cuts Full-Year Guidance

By Dominique Vidalon and Emma Rumney
PARIS/LONDON (Reuters) – Remy Cointreau has reduced its full-year expectations as it continues to face double-digit sales declines and prolonged challenges in the U.S., Europe, and Asia.

The manufacturer of Remy Martin cognac and Cointreau liqueur initially flourished post-COVID-19 lockdowns, benefiting from increased consumer spending on premium spirits. However, the company has experienced a significant downturn as economic conditions have deteriorated in recent years.

Sales Forecast
Remy now anticipates another double-digit decline in organic sales for the fiscal year 2024-2025, following a 19.2% decrease last year, rather than a progressive recovery in the second half of the year. This forecast will also negatively affect its profit margins.

Shares of Remy fell 3.6% in early trading but later stabilized, showing a 0.92% decline by 0804 GMT, reaching their lowest levels since 2016.

The company’s troubles have worsened further due to Beijing’s tariffs on EU brandy imports, noted to have a minor effect for the fiscal year ending March 31, and plans are in place to address the impact from 2025-2026.

Future Expectations
The statement from Remy indicates that the 2024-2025 period is expected to be a transition year, aiming for high-single-digit annual sales growth moving forward.

Currently, 70% of Remy’s sales are derived from cognac, predominantly in U.S. and Chinese markets, both of which have encountered declining demand. The company stated that the U.S. market will not see growth until the fourth quarter, countering earlier expectations.

Challenges persist in China’s slow economy and significant drops across Asia, with Europe, the Middle East, and Africa reporting an 18.8% reduction in sales as well.

In response, Remy plans a new €50 million ($54 million) cost-cutting initiative, as its organic sales fell by 16.1% in the second quarter, surpassing the predicted 15.4% decline.

Competitors, including Pernod Ricard and LVMH, have also faced disappointing forecasts amid ongoing economic struggles in China.

($1 = 0.9240 euros)