- Sales down -22.2% on an organic basis, reflecting
continued strong destocking in the United States
- Gross margin showing solid resilience: up +0.3
points on an organic basis to 72.2%, supported by an aggressive
value-driven strategy in line with the Group’s long-term
ambition
- Ongoing investments on marketing and communication
(+6.5% on an organic basis to 21.8% of sales)
- Roll-out of cost-cutting plan: around €100 million this year,
of which €25 million already achieved in the first half
- Current Operating Profit: €169.1 million (-43.0% on an
organic basis compared with a record baseline)
- 2023-24 and 2029-30 objectives confirmed
Regulatory News:
Rémy Cointreau (Paris:RCO) generated consolidated sales
of €636.7 million in the first half of 2023-2024, down -22.2% on an
organic basis (up +20.9% compared to the first half of 2019-2020).
On a reported basis, sales were down -26.6% including a negative
currency effect of -4.4%, due primarily to trends in the renminbi
and the US dollar.
Current Operating Profit stood at €169.1 million, down
-43.0% on an organic basis (i.e., up +16.1% compared to the first
half of 2019-2020). Beyond a high base of comparison (the Group
recorded the equivalent of 12 months of COP in the first six months
of 2022-23), this performance reflects a decrease in sales,
partially offset by a reduction in overhead costs. Current
operating margin slipped by -9.8 points on an organic basis to
26.6%.
Key figures – in €m (unless
otherwise stated)
H1 2023-24
H1 2022-23
Reported change
Organic change
vs. H1 2022-23
vs. H1 2019-20
Sales
636.7
867.1
-26.6%
-22.2%
+20.9%
Gross margin (%)
72.2%
71.9%
+0.3 pts
+0.3 pts
+4.5 pts
Current Operating Profit
169.1
319.3
-47.0%
-43.0%
+16.1%
Current operating margin (%)
26.6%
36.8%
-10.3 pts
-9.8 pts
-1.1 pts
Net profit - Group share
113.0
223.8
-49.5%
-44.3%
+17.8%
Net margin (%)
17.7%
25.8%
-8.1 pts
-7.3 pts
-0.5 pts
Net profit – Group share excl.
non-recurring items
113.0
226.8
-50.2%
-45.1%
+24.7%
Net margin excl. non-recurring items
(%)
17.7%
26.2%
-8.4 pts
-7.7 pts
+0.6 pts
EPS Group share (€)
2.24
4.40
-49.1%
-43.9%
+16.1%
EPS Group share excl. non-recurring items
(€)
2.24
4.46
-49.8%
-44.6%
+23.0%
Net debt /EBITDA ratio
1.57x
0.65x
+0.92x
+0.92x
+0.18x
Eric Vallat, CEO,
commented:
“Our half-year results were heavily impacted by developments in
the US market, which has faced cyclical headwinds including high
inventories linked to a sharp normalization of consumption, an
unprecedented promotional environment, and rising interest rates.
Against this backdrop, we are staying the course, convinced that
our value-driven strategy remains underpinned by favorable medium-
and long-term trends. This is why we opted to implement
cost-cutting measures to mitigate short-term effects. Despite
limited visibility over the next few months, we are taking a much
longer-term view, building on desirable 300-year-old brands with a
unique heritage. Today we are determined to follow our roadmap as
we implement our four strategic priorities, and we are confident
that we will achieve our medium-term objectives in 2029-30."
Current Operating Profit by division
In €m (unless otherwise stated)
H1 2023-24
H1 2022-23
Reported change
Organic change
vs. H1 22-23
vs. H1 19-20
Cognac
145.3
299.7
-51.5%
-47.2%
+9.3%
As % of sales
34.9%
47.0%
-12.0 pts
-11.5 pts
-0.1 pts
Liqueurs & Spirits
30.3
31.9
-4.8%
-3.5%
+40.2%
As % of sales
14.7%
14.9%
-0.2 pts
-0.5 pts
-1.6 pts
Subtotal: Group brands
175.6
331.5
-47.0%
-43.0%
+13.3%
As % of sales
28.2%
38.9%
-10.7 pts
-10.3 pts
-2.0 pts
Partner brands
0.2
0.1
-
-
-
Holding company costs
(6.7)
(12.3)
-45.4%
-45.3%
-25.6%
Total
169.1
319.3
-47.0%
-43.0%
+16.1%
As % of sales
26.6%
36.8%
-10.3 pts
-9.8 pts
-1.1 pts
Cognac
The Cognac division’s first-half sales fell -30.1% on an
organic basis (+9.4% compared to 2019-20), including a -39.0% fall
in volumes and a steep +8.9% rise due to price-mix. This reflects
both a significant decline in sales in North America—where the
Group aims to reduce its inventories and is facing a normalization
of consumption in a fierce promotional environment—and solid trends
in the rest of the world.
Current Operating Profit fell -47.2% on an organic basis
to €145.3 million, triggering an organic decline of -11.5 points in
current operating margin to 34.9%. While the Group’s value-driven
strategy helped hold gross margin high, tight management of
overheads only partially offset the fall in sales, combined with a
rise in marketing and communication expense.
Liqueurs & Spirits
The Liqueurs & Spirits division’s sales were
steady (+0.1%) on an organic basis (up +55.8% compared to 2019-20),
reflecting a -6.5% decrease in volume and a +6.6% rise due to price
mix. Sales accelerated sharply in the second quarter, rising +12.1%
on an organic basis in the wake of a steep recovery in the US, as
expected. The rest of the world showed good trends.
Current Operating Profit stood at €30.3 million, down
-3.5% on an organic basis, setting current operating margin at
14.7% (an -0.5-point decline on an organic basis). This trend
reflects the combined impact of a sharp rise in gross margin (+2.5
points) in the wake of last April's price increase, along with
increased spending on marketing and communications to prepare for
future growth.
Partner Brands
Sales of Partner Brands were down -3.2% on an organic
basis, and up +8.4% compared to 2019-20.
Current Operating Profit stood at €0.2 million in the
first half of 2023-24, a slight €0.1 million higher than in the
first half of 2022-23.
Consolidated results
Current Operating Profit (COP) totaled €169.1 million,
down -47.0% as reported (-43.0% on an organic basis). This included
a -43.0% organic decline in Current Operating Profit for Group
Brands and a -€5.6 million reduction in the holding company’s
costs, reflecting a selection of cost-cutting measures implemented
in response to current economic conditions.
This performance includes a negative currency effect of
-€13.0 million resulting primarily from unfavorable trends in both
the renminbi (whose contribution is on the rise) and the US dollar.
The average euro/dollar exchange rate weakened from 1.04 in the
first half of 2022-23 to 1.09 in the first half of 2023-24, while
the average collection rate (linked to the Group’s hedging policy)
rose from 1.08 in the first half of 2022-23 to 1.12 in the first
half of 2023-24.
Current Operating Margin stood at 26.6%, down -9.8 points
on an organic basis and down -10.3 points as reported. This
reflects:
- A solid organic improvement in gross margin, which reached a
new record high of 72.2% (+0.3 points on an organic basis, up +4.5
points compared to 2019-20) backed by a positive price effect
- A rise in the Group’s marketing and communication spend
(ratio up 5.9 points on an organic basis, representing a rise of
6.9 points compared to 2019-20).
- A rise in the ratio of overheads (up 4.2 points on an organic
basis) despite a -5.2% reduction in the cost base on an organic
basis
- An unfavorable -0.4-point currency effect
Operating profit totaled €169.1 million, down -46.4% as
reported. This does not include other operating income and expense
from the first half of 2023-24.
Financial expense rose from -€5.1 million in the first
half of 2022-23 to -€15.7 million in the first half of 2023-24
following an increase in average monthly debt and rising interest
rates.
Taxes totaled €40.8 million, for an effective tax rate of
26.6% compared with 28.0% in the first half of 2022-23. The
difference stems mainly from changes in the geographical mix.
Net profit, Group share stood at €113.0 million, down
-49.5% as reported (+17.8% on an organic basis compared to
2019-20), setting net margin at 17.7%, down -8.1 points as
reported.
EPS Group share was €2.24, down -49.1% as reported
compared with the first half of 2022-23.
Net debt totaled €590.5 million, up €53.8 million from
March 31, 2023. This rise reflects the negative trend in Free
Cash-Flow, partially offset by the positive non-cash impact of
early conversion of part of the Group’s OCEANE convertible bond
(€50.8 million). As a result, the ratio of net debt/EBITDA
came to 1.57 at 30 September 2023 compared with 0.84 on 31 March
2023 and 0.65 on 30 September 2022.
2023-24 objectives confirmed
For full-year 2023-24, Rémy Cointreau assumes the following:
- In the United States, market conditions have
deteriorated on the back of a fiercely promotional environment and
a rise in interest rates that has cut distributors’ financing
capacity. Consequently, Rémy Cointreau does not expect a return to
growth in sales before fiscal 2024-25.
- In APAC, the Group expects growth in sales, tempered by
a slower than anticipated post-Covid economic recovery in
China.
- Lastly, in the EMEA region, the Group expects annual
growth to be moderated by a persistently inflationary context.
In this context, Rémy Cointreau is determined to protect its
2023-24 profitability through tight cost controls, while continuing
to roll out its medium-term plan. To this end, it will:
- maintain a strict and uncompromising pricing policy
- protect its gross margin in a persistently inflationary
environment
- selectively reduce its marketing and communications spend,
particularly for the Cognac division
- significantly reduce other operating costs
As a result, for full-year 2023-24 Rémy Cointreau
expects:
- sales to decline by between -15% and -20% on an organic
basis
- a contained organic decrease in COP margin thanks to
deployment of a major cost-cutting plan, estimated at around €100
million this year (including €25 million already achieved in the
first half)
Lastly, based on shifts in its geographical mix and the
renminbi’s decline, the Group expects exchange rates to have a
negative impact for the full year for:
- Sales: between -€50m and -€60m
- COP: between -€10m and -€15m
Rémy Cointreau is today ahead of its strategic plan, with
operations underpinned by solid foundations and a long-term vision.
This makes 2023-24 a year that will allow the Group to return
cognac inventories in the United States to healthier levels and
absorb the effects of post-Covid normalization before heading
into 2024-25 in the best possible conditions, resuming the
trajectory it set itself for 2029-30.
2029-30 objectives confirmed
Rémy Cointreau reiterates both its financial and
extra-financial targets for 2029-30, and its aim to become
the global leader in exceptional spirits.
The Group targets a gross margin of 72% and a Current
Operating Margin of 33% (based on 2019-20 consolidation scope
and exchange rates).
As part of its “Sustainable Exception” plan, Rémy Cointreau aims
to train and engage 100% of its direct partners in agriculture
in sustainable farming practices, targeting a 50% reduction
in carbon emissions per bottle by 2030. This is the first step
towards achieving zero net carbon status in 2050—a trajectory
compatible with holding global warming to +1.5°C as validated by
the Science Based Target Initiative (SBTi).
A Webcast for investors and analysts will be held today,
starting at 9.00 (CET) with Marie-Amélie de Leusse, Chairwoman;
Eric Vallat, CEO; and Luca Marotta, CFO. Presentation slides are
available online at www.remy-cointreau.com under “Finance”.
Appendices
Sales and Current Operating Profit by
division
€m (unless otherwise stated)
H1 2023-24
H1 2022-23
Change
Reported
A
Organic
B
Reported
C
Reported
A/C-1
Organic
B/C-1
Sales
Cognac
416.1
445.8
638.1
-34.8%
-30.1%
Liqueurs & Spirits
206.7
214.6
214.5
-3.6%
+0.1%
Subtotal: Group Brands
622.7
660.4
852.6
-27.0%
-22.5%
Partner Brands
14.0
14.1
14.5
-4.0%
-3.2%
Total
636.7
674.5
867.1
-26.6%
-22.2%
Current Operating Profit
Cognac
145.3
158.1
299.7
-51.5%
-47.2%
As % of total sales
34.9%
35.5%
47.0%
-12.0 pts
-11.5 pts
Liqueurs & Spirits
30.3
30.8
31.9
-4.8%
-3.5%
As % of total sales
14.7%
14.3%
14.9%
-0.2 pts
-0.5 pts
Subtotal: Group Brands
175.6
188.9
331.5
-47.0%
-43.0%
As % of total sales
28.2%
28.6%
38.9%
-10.7 pts
-10.3 pts
Partner Brands
0.2
0.0
0.1
-
-
Holding Company costs
(6.7)
(6.7)
(12.3)
-45.4%
-45.3%
Total
169.1
182.1
319.3
-47.0%
-43.0%
As % of total sales
26.6%
27.0%
36.8%
-10.3 pts
-9.8 pts
Summary income statement
€m (unless otherwise stated)
H1 2023-24
H1 2022-23
Change
Reported
Organic
Reported
Reported
Organic
A
B
C
A/C-1
B/C-1
Sales
636.7
674.5
867.1
-26.6%
-22.2%
Gross margin
459.9
486.9
623.7
-26.3%
-21.9%
Gross margin (%)
72.2%
72.2%
71.9%
+0.3 pts
+0.3 pts
Current Operating Profit
169.1
182.1
319.3
-47.0%
-43.0%
Current operating margin (%)
26.6%
27.0%
36.8%
-10.3 pts
-9.8pts
Other non-current income and expenses
-
-
(4.0)
-
-
Operating profit
169.1
182.1
315.3
-46.4%
-42.2%
Net financial income (expense)
(15.7)
(13.0)
(5.1)
+205.7%
+152.7%
Corporate income tax
(40.8)
(45.0)
(86.9)
-53.1%
-48.2%
Tax rate (%)
(26.6%)
(26.6%)
(28.0%)
-1.4 pts
-1.4 pts
Share in profit (loss) of
associates/minority interests
0.4
0.4
0.4
-23.7%
-23.7%
Net profit – Group share
113.0
124.6
223.8
-49.5%
-44.3%
Net margin (%)
17.7%
18.5%
25.8%
-8.1 pts
-7.3 pts
Net profit – Group share excl.
non-recurring items
113.0
124.6
226.8
-50.2%
-45.1%
Net margin excl. non-recurring items
(%)
17.7%
18.5%
26.2%
-8.4pts
-7.7 pts
EPS Group - share (€)
2.24
2.47
4.40
-49.1%
-43.9%
EPS Groupe – share excluding non-recurring
items (€)
2.24
2.47
4.46
-49.8%
-44.6%
Cash-Flow statement
As of September 30 (in €m)
2023
2022
Change
Opening net financial debt (April
1st)
(536.6)
(353.3)
-183.3
Gross operating profit (EBITDA)
195.4
343.8
-148.4
WCR for eaux-de-vie and spirits in ageing
process
(0.8)
2.1
-2.9
Other working capital items
(172.1)
(212.9)
+40.7
Capital expenditure
(45.8)
(31.7)
-14.1
Financial expenses
(13.9)
(4.7)
-9.2
Tax payments
(61.8)
(77.2)
+15.4
Net flows on other non-current income and
expenses
-
(2.9)
+2.9
Free Cash-Flow
(99.0)
16.6
-115.6
Other proceeds/disposals
0.3
(3.3)
+3.6
Capital increase / share buyback
-
(61.7)
+61.7
OCEANE conversion impact on Financial
debt
50.8
42.3
+8.4
Conversion differences and others
(5.9)
11.1
-17.0
Other Cash flow
45.2
(11.5)
+56.7
Total cash flow for the period
(53.8)
5.0
-58.9
Closing net financial debt (September
30)
(590.5)
(348.3)
-242.2
A Ratio (Net debt/EBITDA)
1.57
0.65
0.92
Balance sheet
As of September 30 (in €m)
2023
2022
Non-current assets
1,023.4
996.4
Current assets
2,520.3
2,149.0
o/w inventories
1,839.3
1,647.6
o/w Cash and equivalent
277.6
95.0
Total Assets
3,543.7
3,145.4
Shareholders’ equity
1,778.2
1,740.2
Non-current liabilities
758.5
389.3
o/w Long term financial debt
691.5
319.3
Current Liabilities
1,006.9
1,015.9
o/w Short-term financial debt
176.6
123.9
Total Liabilities and Shareholders’
equity
3,543.7
3,145.4
Definitions of alternative performance
indicators
Due to rounding, the sum of values presented in this document
may differ from totals as reported. Such differences are not
material.
Rémy Cointreau’s management process is based on the following
alternative performance indicators, selected for planning and
reporting purposes. The Group’s management considers that these
indicators provide users of the financial statements with useful
additional information to help them understand the Group’s
performance. These alternative performance indicators should be
considered as supplementing those included in the consolidated
financial statements and the resulting movements.
Organic growth in sales and Current Operating Profit
Organic growth is calculated excluding the impact of exchange
rate fluctuations, acquisitions and disposals. This indicator
serves to focus on Group performance common to both financial
years, which local management is more directly capable of
measuring.
The impact of exchange rates is calculated by converting sales
and Current Operating Profit for the current financial year using
average exchange rates (or, for Current Operating Profit, the
hedged exchange rate) from the previous financial year.
For acquisitions in the current financial year, sales and
Current Operating Profit of acquired entities are not included in
organic growth calculations. For acquisitions in the previous
financial year, sales and Current Operating Profit of acquired
entities are included in the previous financial year; however, they
are only included in current year organic growth calculations with
effect from the anniversary date of the acquisition.
For significant disposals, data is post-application of IFRS 5,
under which results of entities disposed of are systematically
reclassified under “Net earnings from discontinued operations”.
Indicators “excluding non-recurring items”
The two items set out below constitute key indicators for
measuring recurring business performance, since they exclude
significant items which, by virtue of their unusual nature, cannot
be considered inherent to the Group’s ongoing performance:
- Current Operating Profit consists of operating profit
before other non-recurring operating income and expenses.
- Net profit attributable to the Group excluding non-recurring
items consists of net profit attributable to the Group adjusted
to exclude other non-recurring operating income and expenses,
associated tax effects, profit from deconsolidated, divested and
discontinued operations and the contribution from dividends paid in
cash.
Gross operating profit (EBITDA)
This measure, which is used in particular to calculate certain
ratios, equates to Current Operating Profit less amortization and
depreciation expenses on intangible assets and property, plant and
equipment for the period, expenses arising from stock option plans,
and dividends received from associates during the period.
Net debt
Net financial debt as defined and used by the Group is equal to
the sum of long- and short-term financial debt and accrued
interest, less cash and cash equivalents.
About Rémy Cointreau
All around the world, there are clients seeking exceptional
experiences; clients for whom a wide range of terroirs means a
variety of flavors. Their exacting standards are proportional to
our expertise – the finely-honed skills that we pass down from
generation to generation. The time these clients devote to drinking
our products is a tribute to all those who have worked to develop
them. It is for these men and women that Rémy Cointreau, a
family-owned French Group, protects its terroirs, cultivates
exceptional multi-centenary spirits and undertakes to preserve
their eternal modernity. The Group’s portfolio includes 14 singular
brands, such as the Rémy Martin and Louis XIII cognacs, and
Cointreau liqueur. Rémy Cointreau has a single ambition: becoming
the world leader in exceptional spirits. To this end, it relies on
the commitment and creativity of its 2,021 employees and on its
distribution subsidiaries established in the Group’s strategic
markets. Rémy Cointreau is listed on Euronext Paris.
Regulated information in connection with this
press release can be found at www.remy-cointreau.com
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231129805378/en/
Investor relations: Célia d’Everlange /
investor-relations@remy-cointreau.com Media relations:
Mélissa Lévine / press@remy-cointreau.com
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