Remy Cointreau sees the premium cognac demand as a major profit engine

Remy Cointreau sees the premium cognac demand as a major profit engine

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After exceeding sales estimates in the third quarter, French spirit company Remy Cointreau is convinced that its premium cognac agressive demand in China, the U.S., and Europe will support profit growth this year.

Remy’s shares were up 0.7 percent at 192.40 euros at 07:02 GMT. The epidemic has fueled Remy Cointreau’s push for higher-priced spirits in order to enhance long-term profit margins, hastening a consumer trend toward premium drinks, at-home consumption, cocktails, and e-commerce.

Sales for the three months ended Dec. 31 totaled $498.1 million, rising 21 percent organically from the same period last year, exceeding a company-compiled estimate of 18 analysts for a 15.1 percent growth.

Sales at Remy Martin’s cognac segment, which accounts for 90% of the company’s income, increased 19.4% to 332.7 million euros, beating analysts’ expectations of 14.9 percent. As a result, the current consensus anticipates a 38 percent increase in organic current operating profit for the full year 2021-22.

The business said the third-quarter results highlighted “amazing” sales growth in China, owing to solid e-commerce sales during the Singles’ Day online shopping spree and demand for its Club cognac.

In the third quarter, demand for cognac in the United States remained strong, with high-end brands such as Louis XIII, which sells for more than $2000 a bottle, Remy Martin XO, and 1738 Accor (ACCP) Royal outperforming.

Remy Cointreau maintained its prediction for “very strong” organic growth in present operating profit and excellent organic sales growth for this fiscal year, reiterating its confidence in its capacity to beat the premium spirits market.

The business reiterated that full-year earnings would be driven primarily by first-half growth due to the increased marketing and communication expenditure and a strong reference base in the second half.

The S&P/ASX 200 index fell 2.49 percent at the close in Sydney, hitting a fresh 6-month low. The AUD/USD rose 0.01 percent to 0.7141.

Gold futures for February rose 0.02 percent, or 0.35 percent, to $1842.05 per troy ounce. Crude oil for March delivery climbed 0.46 percent, or $0.38, to $83.69 per barrel.

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