Remy beats the street in second quarter, not worried about China and sticks to high profit forecast
French spirits maker Remy Cointreau handily beat the Street’s estimate on sales at the end of last week, when it reported its second quarter earnings. The company also said that it was less concerned about a potential slowdown in China than it had been previously, and that demand from the country remained high. Solid results and strong underlying fundamentals convinced it to stick to earlier forecasts for the rest of the year, and sent the share price up.
Remy Cointreau’s share price jumped by 4% over last week
SOURCE: Yahoo Finance
Remy said that Chinese demand held strong throughout the quarter, and helped propel cognac sales up by 12%, year on year. That’s good news for luxury investors, many of whim are concerned by the trade difficulties between Beijing and Washington. China has emerged as a driving force for the luxury sector over the last decade, and strong demand from the country has been a key factor in the luxury rebound of the last two years.
Speaking about demand from China, Remy’s chief financial officer, Luca Marotta, told analysts that the group was “very satisfied”, and that Remy’s strong showing in the country “gives us a huge amount of confidence over the third quarter.” He explained: “We are not seeing any slowdown in global demand in China, so far we are very optimistic on China, more optimistic than a few months ago.”
While cognac was the outperformer during the quarter, Remy saw strong sales overall. On a like-for-like basis, sales rose by 9.1% against the same quarter in the previous year to 329.8 million euros. That’s better than the 7.8% analysts expected, and it’s better than Remy’s performance in the first quarter (when it logged a year on year increase in sales of 5.9%).
Remy also said that its strategy of focussing on high-end drinks was paying off, as more and more consumers made the jump into the premium section of its product offering.
Praising “continuing excellent trends in Greater China, as well as in other key markets of the Asia-Pacific region,” Marotta said he was “ok” with the group’s previous forecast of a 13.5% rise in full year operating profit.
Dominion holds Remy Cointreau in its Global Trends Luxury Fund.
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