-- Remy Cointreau posts strong profit growth after write-down
from a year earlier isn't repeated
-- Surge in demand for cognac in China boosts sales
-- Company to propose special dividend
(Adds detail, CEO quotes throughout, updates share price in
final paragraph.)
By Nadya Masidlover
PARIS--French alcoholic drinks company Remy Cointreau SA
(RCO.FR) Tuesday said it is confident of continued steady growth as
it posted a sharp rise in full-year net profit, bouncing back after
being hit by a one-off write-down a year earlier.
Chief Executive Jean-Marie Laborde said business is continuing
to "grow strongly," echoing the optimism of Remy Cointreau's rivals
regarding growth of high-end brands, as rising incomes in Asia and
Latin America continue to fuel demand for premium beverages.
Speaking during the company's results presentation, Mr. Laborde
said the outlook is favorable but declined to give guidance for
fiscal 2013, adding that the company is watchful of the precarious
euro-zone situation.
Like its competitors, Remy Cointreau's growth has been driven by
rising demand in fast-growing emerging markets, as consumers in
Asia in particular increasingly develop a taste for spirits such as
cognac and whisky. In contrast, growth in Western Europe has been
relatively sluggish given the high levels of unemployment, slowing
income growth and tax increases that drinkers have had to contend
with.
Remy Cointreau's net profit for the year ended March 31 rose 57%
to 110.8 million euros ($138.7 million), from EUR70.5 million a
year earlier, when the company booked a EUR45 million loss related
to the depreciation of Metaxa, a brand sold mainly in debt-laden
Greece.
Revenue rose 13% from a year earlier to EUR1.03 billion, boosted
by booming business in cognac, as the spirit continues to grow in
popularity, particularly in China. The company reported growth in
all regions, with double-digit growth in the U.S. as well as Asia,
and Mr. Laborde said business showed no signs of slowing in April
and May.
Remy Cointreau increased its current operating margin--a measure
of its profitability--to 20.4%, from 18.4% last year, boosted by
price increases and a continued move toward upmarket drinks, even
though the company raised spending on marketing.
Mr. Laborde said the company's gross margin, which rose to
61.4%, "has room to progress."
The cognac division--which accounts for close to 58% of annual
revenue--continued to grow strongly, with current operating profit
up 21%, excluding currency effects.
The company announced it will propose to shareholders a EUR1.30
ordinary dividend and an exceptional dividend of EUR1.
Remy Cointreau's fortunes and optimism are largely shared by its
rivals. Pernod Ricard SA (RI.FR) reported solid sales growth in
April, and said growth in the crucial emerging markets remain "very
dynamic." Also in April, LVMH Moet Hennessy Louis Vuitton SA
(MC.FR) said cognac sales had made "an excellent start to the
year," posting volume growth of 9% in the first quarter of 2012.
However, Diageo PLC (DEO) earlier this year sounded a cautious tone
given the challenging conditions in Europe.
Remy Cointreau implemented a share buyback program between
December 2011 and May 2012, purchasing 2.88% of the company's
capital, which will be kept for "external growth
opportunities."
Mr. Laborde said that the company will first prioritize the
organic growth of its brands.
"Of course, we have the means to go ahead with acquisitions,
even several acquisitions of other brands," which are complementary
to the company's portfolio of activity, he added.
At 1055 GMT, shares in Remy Cointreau were up 0.7% at
EUR81.89.
-Write to Nadya Masidlover at nadya.masidlover@dowjones.com
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