The new boss of Remy Cointreau said on Thursday that affluent Chinese consumers remained a key market after problems in the country hit profits for the French spirits company. A Chinese government crackdown on corporate gift-giving hurt demand for Remy Cointreau's premium cognac, contributing to a fall of almost 15 percent in first-half operating profit.
However, the decline was not as bad as analysts had feared, partly due to a strong performance in the liqueurs division. Remy Cointreau said it still expected growth in full-year sales and operating profit despite a mixed economic outlook. Analysts took the view that the glass was half full rather than half empty and Remy shares rose 2.2 percent by 1300 GMT.
"Today's results clearly add confidence to the view that Remy is through the worst and on the road to recovery," brokerage Mirabaud Securities wrote in a note to clients. New Chief Executive Valerie Chapoulaud-Floquet, who has worked for L'Oreal and LVMH, said that China remained important but it was not clear when it would revive. "To date there is no particular sign of a recovery on the Chinese market and that is why everyone is waiting for the Chinese New Year in February," she said.
Like rivals Diageo Plc and Pernod Ricard, Remy has been hit by the Chinese curbs on spending by civil servants, as well as slowing economic growth in the world's second-biggest economy. All three drink companies have however forecast improving sales this year. Remy Cointreau's focus has been on deluxe drinks like Louis XIII cognac, which sells for 2,500 euros a bottle. This has made it more vulnerable than its rivals to China's crackdown.
Remy is now organising private dinners to promote its products to very wealthy Chinese drinkers with a taste for luxury but eager to stay out of the public eye. Chapoulaud-Floquet told journalists the group still needed a vodka brand and was also likely to look at French liqueur brand Grand Marnier, which is exploring a sale. Its other brands include Remy Martin cognac, Cointreau liqueur and Mount Gay Rum. Current operating profit for the six months to September 30 reached 102.1 million euros ($127.7 million), down 14.6 percent like-for-like from a year ago but above analysts' expectations for 89 million euros.
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