Remy Cointreau shares skid as cognac sales boom looks to have peaked

Shares in Remy Cointreau slid nearly 7% on Tuesday after the premium drinks maker indicated sales and profit growth would slow after a strong first half as consumption trends return to normal after two “outstanding” years.

The group’s cautious outlook overshadowed a better-than-expected 16.2% rise in second quarter sales, boosted by a recovery in demand for its top cognac brands in China during the Mid-Autumn festival late last month.

The maker of Remy Martin cognac and Cointreau liquor reiterated that for the full year 2022/23 it expected another year of strong organic sales growth and improving operating margins, helped by strict costs control to mitigate inflationary pressures.

By 0759 GMT, Remy Cointreau shares were down 7.6% at 152.10 euros.

“Remy Cointreau Q2 sales were solid and forex very

positive but the second half outlook is tinged with caution,” Bernstein analysts said in a note.

Sales for the three months to Sept. 30 came in at 457.2 million euros ($451.4 million), marking a like-for-like rise of 16.2% which beat analysts’ expectations for 14.3% growth.

Cognac sales rose 15.6% to 345.9 million euros reflecting double-digit sales growth in China, with strong demand for Club and XO cognac during the Mid-Autumn festival in a market still impacted by stop and start COVID restrictions. Cognac inventories were very low at the end of September in China, the group said.

Remy Cointreau’s fiscal year starts on April 1 and ends on March 31.

Remy shares are down around 23% this year after rising 40% last year.

The pandemic accelerated Remy Cointreau’s long-term drive towards higher-priced spirits to boost profit margins, speeding a shift towards premium drinks, cocktails and e-commerce as people drank more expensive drinks at home.

“Ideally positioned to take advantage of new consumption trends and buoyed by its advance on roll-out of its strategic plan, Remy Cointreau is looking to 2022/23 with confidence,” the company said in a statement.

For the full year Remy forecast a positive currency effect with reported sales now seen at 110-120 million euros compared with 90-100 million previously, and current operating profit at 55-60 million compared with 50-60 million.

($1 = 1.0129 euros)