French spirits company Remy Cointreau reported higher annual sales and kept its target for profit growth for the full year, although demand for its premium cognac slowed down in China during the final quarter.
The maker of Remy Martin cognac and Mount Gay rum, which is trying to sell more of its higher priced spirits to boost profit, said sales came in at €1.216 billion ($1.36 billion) for its full financial year, which ended on 31 March.
"With full-year sales in line with the group's forecasts, Remy Cointreau confirms its guidance of growth in current operating profit for the financial year 2018/19, assuming constant exchange rates and consolidation scope," said the company.
Chief Finance Officer Luca Marotta said in January that he was comfortable with market estimates for a 13.5% rise in full-year current operating profit.
Like-For-Like Rise
In the fourth quarter alone, revenue came in at €297.1 million, marking a like-for-like rise of 7%, albeit a slowdown from 8.7% growth in the third quarter.
The increase was above analysts' forecasts for 6.1% growth.
Remy Cointreau said that - as it had previously flagged - the fourth quarter reflected the negative impact of an earlier timing of the Chinese New Year in early February that had led to advance shipments of cognac in the third quarter.
Remy's cognac sales reached 209.1 million euros in the fourth quarter, marking a rise of 7.9% on a like-for-like basis. That increase, however, represented a slowdown from a rise of 15.6 percent in the third quarter, and was below analysts' expectations for an 8.1 percent increase.
Last week, Remy's larger rival Pernod also reported a sales slowdown, due partly to conditions in China.
There are global fears about an economic slowdown in China and also concerns that trade tensions between Beijing and Washington could have a knock-on effect on Chinese consumers, whose appetite for top brands has supported a rebound in the global luxury industry over the past two years.
Remy Cointreau, which makes the Louis XIII luxury cognac that sells for over $2,000 a bottle, would be particularly vulnerable to a slowdown in China, analysts have said.
News by Reuters, edited by Donna Ahern Checkout. Click subscribe to sign up for the Checkout print edition.
