Remy Cointreau Full-Year Profit Gains on Asian Demand
Remy Cointreau SA (RCO), France’s second- biggest distiller, said full-year earnings rose 24 percent as it raised prices and Asian drinkers bought more Remy Martin cognac.
Operating profit excluding one-time items rose to 207.7 million euros ($260 million) in the year ended March 31 from 167 million euros a year earlier, Paris-based Remy said today. Excluding the effects of acquisitions and currency shifts, or on an organic basis, profit rose 20 percent, compared with the 21 percent median estimate of seven analysts surveyed by Bloomberg.
The distiller, along with competitors Diageo Plc (DGE) and Pernod Ricard SA, is selling more expensive varieties of cognac and whisky to consumers in countries including China, helping drive improvements in profitability. Asian demand is helping offset tougher conditions in the U.S. and Europe, which is suffering “an uncertain economic and monetary environment,” it said.
“Cognac is experiencing very strong volume growth in Asia,” Barry Gallagher, an analyst at Davy Research, said in a note, adding that Remy’s debt has been reduced to a record low.
Remy rose as much as 1.2 percent in early Paris trading and was up 0.9 percent at 82.09 euros as of 9:16 a.m. The stock has advanced 32 percent this year, the second-biggest gain in the European Stoxx 600 Food and Beverage Index.
Remy said today it would consider “potential growth opportunities” while expanding its brands.
The distiller provided “very little commentary about the new year,” said Ian Shackleton, an analyst at Nomura in London, adding that an analyst meeting in Paris today “will be key.”
The company plans to pay a dividend of 1.30 euros a share as well as a special dividend of 1 euro a share.
Remy’s debt dropped to 188.6 million euros compared with 328.9 million euros at the end of March 2011, helped by the sale of its champagne unit. The company said June 5 that it signed a 225 million-euro revolving credit line with a group of 11 banks.
The distiller had previously reported a 16 percent increase in full-year sales to 1.03 billion euros.
Organic operating profit rose 22 percent at Remy’s cognac unit, the biggest contributor to earnings, led by sales in Asia, the U.S., Russia and in airports, it said today.
The liqueurs and spirits division’s operating profit rose 14 percent even as “mixed fortunes” in European markets restrained growth. Cointreau and Mount Gay grew in “key markets,” the company said, and Metaxa sales rebounded from two-year declines in Greece, its main market. The company wrote down the value of the brand by 45 million euros a year ago.
Current operating margin, a measure of profitability, rose to 20.2 percent from 18.4 percent a year earlier.
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