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Market latest: Credit downgrade for Rémy Cointreau SA and Treasury Wine Estates halts trading

Published:  30 January, 2014

It has been a challenging week financially for two major players in the drinks trade; Remy Cointreau SA credit rating was downgraded on Monday to 'negative' and Treasury Wine Estates requested a trading halt on Tuesday until the ASX opens tomorrow.

Rémy Cointreau SA Uncertain Future

Rémy Cointreau BrandsRémy Cointreau BrandsRémy Cointreau Brands

Fitch Ratings, a UK and USA based global credit agency, revised its outlook on Remy Cointreau SA from "stable" to "negative" following the resignation of two senior executives within the last month.

In early January, Frederic Pflanz, the former chief operating officer became the chief executive on October 1, stepped down for personal reasons.  On January 23, 2014, Patrick Piana, the key leader of Rémy Martin Cognac brand which is responsible for 70% of Rémy Cointreau's profits, announced his departure. This followed the announcement on January 21, that sales dipped by 35% for Rémy Martin Cognac. 

The drop in sales has been exacerbated by the Chinese government instituting an anticorruption campaign against what has been traditional, yet overly generous, gift giving which has hit Remy'premium s product portfolio. 

Rémy Cointreau announced yesterday that ex- LVMH chief executive officer Eric Vallat would be the new chief executive officer of the House of Rémy Martin, which will hopefully reassure investors about the leadership of the company.

Storm clouds on TWE's horizon

Treasury Wine Estates (TWE) requested a trading halt on Tuesday through tomorrow January 30, 2014 on the expectation that company will lower its forecasted pre-tax earnings in 2013-14 of between $230 million and $250m.

In a request to the Australian Securities Exchange, TWE stated: "The company requests this halt while management reviews its preliminary financial results for the six-month period ending December 31, 2013 and any implications for the company's full-year forecast."

The request comes on the heels of an incredibly challenging year financially for the wine conglomerate that owns iconic brands such as Wolf Blass, Penfolds, Lindemanns, and Rosemount, particularly relating to $160m excess stock writedown it took in July 2013. 

David DearieDavid Dearie

The write down resulted in the dismissal of David Dearie in September and a class action lawsuit from investors that is ongoing. The holiday spending period did not go as well as the company had hoped, with holiday sales underperforming expectations.

* You can read about Treasury's plans for the UK in our exclusive interview with European and UK head Dan Townsend. Click here.

Rémy Cointreau Brands