- Price increases weighed on revenue as retailers bought earlier
- Distiller signals that demand for high-end cognac is improving
Remy Cointreau SA reported first-quarter revenue that missed analysts’ estimates as Remy Martin cognac sales weakened in Europe and Asia.
Sales were unchanged on an organic basis in the three months through June, the distiller said in a statement Wednesday. Analysts expected a 1.1 percent gain. The stock fell 1.1 percent as of 9:23 a.m. in Paris.
‘‘This is slightly below market expectations and is due to advance shipments in the fourth quarter before a global hike in prices,” wrote Virginie Roumage, an analyst at Bryan Garnier.
Remy Cointreau is increasingly relying on the U.S., the largest market for Remy Martin, as double-digit growth in the country is outpacing a slow recovery in China. There, the company is seeing improved trends for its cognac after a government crackdown on extravagant spending had dented demand for the spirit. While Remy Cointreau and Hennessy-owner LVMH have seen a sales rebound in China in recent quarters, Paris-based distiller Pernod Ricard, which owns Martell cognac, has forecast that the demand for international spirits such as cognac and scotch will shrink in the near-term.
Revenue of the company’s flagship Remy Martin cognac dropped 0.5 percent, missing the consensus for a 0.2 percent advance.
The company also said demand for high-end cognac may accelerate as it spends more on advertising. Remy Martin had an ‘‘excellent” performance in the Americas and a decline in revenue from the Asia-Pacific region was a ‘‘one-off” related to shipments to retailers, the distiller said.
The company maintained its forecast for higher operating profit from continuing businesses this year. Remy Cointreau previously said that growth in the first quarter would be held back due to shipping more spirits from France to China ahead of price increases in Asia in the prior quarter.
Total revenue was 218.6 million euros ($240 million). Analysts expected 220 million euros.