Remy, which reported so-called organic sales at its cognac unit that plunged 18 percent in the 9 months through December, said an “unfavorable situation” for spirits in China didn’t improve in its third quarter. Seven analysts surveyed by Bloomberg News had estimated a 12 percent drop in cognac sales.
The maker of Cointreau and Mount Gay rum has suffered as China’s new government clamps down on extravagant spending. That’s led to declining sales of expensive cognac, used for toasts at lavish dinners and for gifting. Remy gets the largest proportion of its sales and profit from Remy Martin cognac. Its share price fell 26 percent in 2013.
“The campaign to promote morality in China is expected to continue to adversely affect the consumption of ultra-premium products and no significant recovery can be expected due to the Chinese New Year,” the company said today in the statement. The festival, a key occasion for consumers to purchase expensive gifts of high-end cognac, falls this year on Jan. 31.
Paris-based Remy reiterated its forecast for a “significant double-digit decline” in profit this year. Chief Executive Officer Frederic Pflanz said in November that annual earnings could fall 20 percent or possibly more.
Pflanz stepped down as CEO, the company said Jan. 2, for personal reasons, and will take the role of development director. Remy named Chairman Francois Heriard Dubreuil interim CEO.
Nine-month group organic sales slid 9.4 percent compared with a median estimate of a 4.7 percent decline after falling 19 percent in the third quarter. Total nine-month sales were 845.7 million euros ($1.1 billion). Organic measures exclude the effect of acquisitions and currency fluctuations.
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