(Boursier.com) — It’s the turn of Remy Cointreau. The title of the spirits group fell 11% to 104.9 euros at the opening of the Paris market, sanctioned after its big profit warning. Citing the deterioration of market conditions, management now forecasts a decline in its 2023-2024 turnover (in organic data) of between 15% and 20%, compared to a previously forecast of stable revenues. He is also aiming for a “controlled” decline in the current operating margin in organic data, whereas he previously saw it stable.
In the United States, market conditions have deteriorated with the persistence of a highly promotional environment and the rise in interest rates which impacts the financing capacities of distributors, explains Rémy Cointreau. As a result, the resumption of sales growth, which was initially expected in the third quarter, is now expected during the 2024-2025 financial year which begins on April 1. In China, sales growth will be lower than expected given the country’s difficult economic recovery after the Covid-19 pandemic.
The company said it would maintain tight cost controls and continue to raise prices to protect margins, and would reduce marketing spending, particularly on cognac.
“Market conditions appear worse than initially expected, with Rémy Martin’s firmer pricing policy contrasting with the intense promotional activity of competing brands and putting additional short-term pressure on volumes,” says Jefferies. “We expect this situation to be exacerbated by some reduction in wholesaler inventories.”
“In a degraded environment in the United States which will not return to growth for cognac before next financial year and a less sustained recovery in China, the group is renouncing its annual outlook as we assumed but in more significant proportions than expected”, indicates TP ICAP Midcap (‘purchase’). The broker once again adjusts its estimates downwards and its target price goes from 176 to 168 euros.
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