Rémy Cointreau raised its full-year profit forecast after a better-than-expected first half, driven by strong demand for its premium cognac in China, the United States and Europe, lifting its stock to a record high on Thursday.
Chief Executive Eric Vallat told journalists the spirits group had made an "encouraging" start to the third quarter in China, thanks to strong sales during the Singles' Day online shopping bonanza and the mid-autumn festival.
Singles' Day business alone makes up 10% of Remy Cointreau's annual sales in China.
'Very Strong' Organic Growth
The maker of Rémy Martin cognac and Cointreau liqueur said it now expected "very strong" organic growth in current operating profit in the 2021/22 financial year. It had previously targetted "strong" growth.
Rémy shares jumped as much as 12% to a record high of €209.80.
The company also remained confident of outperforming the premium spirits market and reiterated a forecast for strong organic growth in full-year sales.
The COVID-19 pandemic has boosted Rémy's drive towards higher-priced spirits to boost profit margins long term, accelerating a shift among consumers towards premium drinks, at-home consumption, cocktails and e-commerce, Vallat said.
Asked to comment on the market consensus for 24.7% organic growth in 2021/22 operating profit and 24.5% growth in sales, Vallat said: "I am rather comfortable" with the sales estimate, while that for profit is "a bit cautious."
'Tougher Comparison Case'
Due to higher marketing and communication spending and a tougher comparison base in the second half, full-year profits will be driven solely by first-half growth, the group said.
Group current operating profit for the six months ended Sept. 30 leapt 104.5% on an organic basis to €212.9 million ($238.8 million). That beat a company-compiled consensus from 22 analysts of €168.1 million.
Operating profit at the Rémy Martin cognac division, which makes nearly 90% of group profit, totalled €188.1 million, up 101.9% on the same basis.
Rémy had already reported a 52% organic jump in first-half sales.
This reflected a strong rebound in bars and restaurants as COVID-19 restrictions eased around the world, while home consumption remained resilient.
News by Reuters edited by Donna Ahern, Checkout. For more Drinks stories click here. Click subscribe to sign up for the Checkout print edition.
