Remy posts strong results despite loss of a key contract
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Remy posts strong results despite loss of a key contract

Luxury spirits company Remy Cointreau reported earnings this week, demonstrating a strong underlying business that was able to deliver solid growth despite the loss of a key travel contract. The contract in question – the only really black mark on an otherwise impressive quarter – was the distribution contract for Russian Standard Vodka, which (alongside the loss of its Campari contract) cost it around 9 million euros in 2018 / 2019.

Remy’s share price has appreciated by 3% so far in 2019

graph 24 remy

Source: Yahoo Finance

Despite this loss of distribution contracts, and the sales they imply, Remy outperformed, seeing its sales increase by 8.1%, year on year, in the third quarter. Cognac, which makes up the majority (78%) of Remy’s sales increase by 13% from the same period in the previous year, and Asia Pacific saw “strong double digit” growth. Remy said that the earlier Chinese New Year has resulted in a 4 million-euro sales boost.

A strong showing in China, particularly for Remy’s own Cointreau brands, should go further to reassure investors that the dry up of Chinese demand for luxury is more than a little overblown. Chinese consumers may not want the latest iPhone, but they seem to have retained a thirst for cognac. According to the company’s finance chief, Luca Marotta, Remi is seeing 20% increases in Chinese cognac sales most quarters. “We are confident we can keep on with that trend,” he said. He also added that the company was “zen-like” on China, and believed it could respond effectively to any crisis that might emerge there. So far, at least, it doesn’t look like it has to.

Disclosure

Dominion holds Remy Cointreau in its Global Trends Luxury Fund.


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