Posted on | June 13, 2012
Written by | BevNetwork
French alcoholic drinks company Rémy Cointreau SA RCO.FR +0.09% Tuesday said it is confident of continued steady growth as it posted a sharp rise in full-year net profit, bouncing back after being hit by a one-off write-down a year earlier.
Chief Executive Jean-Marie Laborde said business is continuing to “grow strongly,” echoing the optimism of Rémy Cointreau’s rivals regarding growth of high-end brands, as rising incomes in Asia and Latin America continue to fuel demand for premium beverages.
Speaking during the company’s earnings presentation, Mr. Laborde said the outlook is favorable but declined to give guidance for fiscal 2013, adding that the company is watchful of the precarious euro-zone situation.
Like its competitors, Rémy Cointreau’s growth has been driven by rising demand in fast-growing emerging markets, as consumers in Asia in particular increasingly develop a taste for spirits such as cognac and whiskey. In contrast, growth in Western Europe has been relatively sluggish given the high levels of unemployment, slowing income growth and tax increases that drinkers have had to contend with.
Rémy Cointreau’s net profit for the year ended March 31 rose 57% to ?110.8 million ($138.7 million), from ?70.5 million a year earlier, when the company booked a ?45 million loss related to the depreciation of Metaxa, a brand sold mainly in debt-laden Greece.
Revenue rose 13% from a year earlier to ?1.03 billion, boosted by booming business in cognac, as the spirit continues to grow in popularity, particularly in China. The company reported growth in all regions, with double-digit growth in the U.S. as well as Asia, and Mr. Laborde said business showed no signs of slowing in April and May.
Rémy Cointreau increased its current operating margin-a measure of its profitability-to 20.4%, from 18.4% last year, boosted by price increases and a continued move toward upmarket drinks, even though the company raised spending on marketing.
Mr. Laborde said the company’s gross margin, which rose to 61.4%, “has room to progress.”
The cognac division-which accounts for close to 58% of annual revenue-continued to grow strongly, with current operating profit up 21%, excluding currency effects.
The company announced it will propose to shareholders a ?1.30 ordinary dividend and an exceptional dividend of ?1.
Rémy Cointreau’s fortunes and optimism are largely shared by its rivals. Pernod Ricard SA RI.FR -0.39% reported solid sales growth in April, and said growth in the crucial emerging markets remain “very dynamic.” Also in April, LVMH Moët Hennessy Louis Vuitton SA said cognac sales had made “an excellent start to the year,” posting volume growth of 9% in the first quarter of 2012. However, Diageo DEO +1.22% PLC earlier this year sounded a cautious tone given the challenging conditions in Europe.
Rémy Cointreau implemented a share buyback program between December 2011 and May 2012, purchasing 2.88% of the company’s capital, which will be kept for “external growth opportunities.”
Mr. Laborde said that the company will first prioritize the organic growth of its brands.
“Of course, we have the means to go ahead with acquisitions, even several acquisitions of other brands,” which are complementary to the company’s portfolio of activity, he added.
Source: Dow Jones
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