Rémy beats the street thanks to strong demand from China
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Rémy beats the street thanks to strong demand from China

Rémy Cointreau, the luxury drinks company behind premium spirits like Rémy Martin cognac and Cointreau orange liqueur, has beaten analysts’ expectations on profit for the full fiscal year. The company cited strong demand from China, which has undergone a luxury turn-around as Beijing loosened its austerity drive, as a driving force behind the success.

Rémy’s share price has appreciated by 4% so far this year

graph 1106 remy

SOURCE: Yahoo Finance

Rémy has been pushing its premium spirits – that means drinks that retail for $50 or more per bottle – in China. The strategy is a direct attempt to increase profit margins, and thus far, it looks to be working.

The company said that China’s anti-corruption drive hit the pricier end of the spirits market, but now it was winding down, a significant recovery was underway.

Operating profit for the year ended March 31 rose to €236.8 million. That converts into a margin of 22% of sales (at constant currencies), and an increase of 1.3%, year on year. This beat analysts’ predictions, which had been for profits of €235.5 million – or organic growth of 12.9% compared to 2016.

Rémy says this is just the beginning, and it’s going to push harder to continue increasing profit this year. It’s looking like it’s in a good position to do so: last year, the company saw strong demand in Greater China, Singapore, Japan, the U.S., Russia, and travel outlets. In other words, people want what Rémy’s selling!

Rémy has also released new guidance for the coming years. The company now expects “a cumulative increase of 2.4% to 3.0% in current operating margin on a like-for-like basis” for the financial years up to 2020. That’s an increase from its previous guidance of a range between 0.8% and 1.8%.

Disclosure

Dominion holds Rémy Cointreau in its Global Trends Luxury Fund.


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