The French spirits group said sales were down 24% on a reported basis for the three months to March 31 due to the complex public health environment. It led to a 9% overall decline for the full year, and Rémy Cointreau warned of further challenges ahead.
The firm advised investors to brace themselves for a year-on-year sales decrease of 50% to 55% in Q1 of the 2020-21 financial year, which is the three months to June 30. It expects to see a sharp slowdown in key European and American markets due to the coronavirus crisis, while still feeling the impacts of wholesaler destocking in China.
The group anticipates a “very gradual recovery in business” during the second quarter of its 2020-21 financial year. As such it reopened its Cognac production site on April 14 and its Angers site on April 20.
Group brands such as Rémy Martin and Cointreau have held up better than partner brands during the Covid-19 pandemic, as the group made a voluntary withdrawal from distribution contracts in Europe and the US. It now expects current operating profit to decline by around 20% on a reported basis for the 2019/20 financial year, and operating profit to decrease by roughly 25%.
Rémy Cointreau’s share price closed at €100.80 on Tuesday and opened at €100.50 today following the news. It then gradually increased during the opening hour of trading.
It has previously sought to assure the market by insisting it benefits from solid economic and financial fundamentals, which allow it to cope with the public health crisis. It initially took the decision to maintain the basic salary of 1,900 employees worldwide until the end of April, and it has since extended that until the end of May, without resorting to any government support.
