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Rémy Cointreau annual net profits up following foreign exchange boost

Published:  09 June, 2016

Improved Cognac sales and a big boost from a favourable foreign exchange helped to drive profits for Rémy Cointreau, which saw annual 2016 net profits soar 10.6%, beating expectations for the business.

Organic net profits, however, for the financial year were actually down -1.4%.

Sales for the company hit €1,050.7 million, with the year ending on 31 March, 2016. Current operating profit totalled €178.2 million, an increase of 6.1% compared to the previous year.

Rémy Martin for the first time in two years posted growth, with sales up 3.2%, which was driven primarily from a strong performance in the United States, Africa, Southeast Asia and Japan.

According to the report: "The EMEA (Europe, Middle East and Africa) region delivered a strong performance in the year led by the group's expansion strategy in Africa, while the Americas region benefited from remarkable growth in the group's brands amid a favourable environment for dark spirits, particularly in the United States." 

Asia-Pacific countries saw significant growth in the second half of the year.

While Cognac sales helped to drive growth, the Liqueurs & Spirits arm of the business was sluggish and saw a decline in profit of -2.8%. This was primarily due to "macroeconomic" and "technical factors that hampered performance in the first half" of the year.  Both Greece and Russia posed challenges for the category.

Partner brands also saw a big decline with profits down 22.9% for the year following the expiring of distributions agreements for both the Piper Heidsieck and Charles Heidsieck Champagne brands in the US. 

Paolo Leschiutta, vice president - senior credit officer at credit rating agency Moody's and lead analyst for Remy Cointreau, said that results were a sign of improvement, but the outlook for the company is still uncertain.

"Remy's strong set of results ease some pressure on its Baa3 ratings, which currently have a negative outlook. Although the operating profit improvement and reported gross debt reduction are credit positive, we would consider stabilising the outlook if the company demonstrates a sustainable recovery in operating performance, particularly in China, and once we have greater clarity on the company's future expected indebtedness level."

Further Leschiutta cautioned that the improved figures for Rémy Cointreau were reliant on improved foreign exchange figures, which could not necessarily be relied on in the future.