(AOF) – Rémy Cointreau’s Board of Directors, meeting on January 12, 2023, with the authorization of the combined general meeting of July 21, 2022, decided to reduce the group’s share capital by way of cancellation by 1,000,000 treasury shares (i.e. 1.93% of the share capital), as announced in the press release of December 21, 2022 relating to the end of the share buyback program. Following this cancellation, Rémy Cointreau holds 396,7011 of its own shares, ie 0.78% of the share capital after reduction.
The share capital now amounts to 81,257,113.60 euros, divided into 50,785,696 shares.
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Key points
– Spirits group born in 1703, with 12 global brands -Remy Martin, Brillet and Louis XIII for cognacs, diversified in liqueurs and spirits with Cointreau and Metaxa for spirits, Mount Gay for rum, The Botanist for gin and, for whiskies, Bruichladdich, Port Charlotte, Ocformore, Westlan and Hautes Glaces;
– Sales of €1.3 billion split between 3 divisions – cognac for 72%, liqueurs and spirits for 25% and partner brands for 3%;
– International positioning, the United States being the group’s leading market (55% of sales in the Americas), ahead of Europe-Middle East-Africa (17%) and Asia-Pacific (28%) );
– Business model: become world number 1 in exceptional spirits and control the distribution circuit (85% of sales), in order to control the sale prices of exceptional spirits, at a unit price above $50;
– Capital controlled by the founding families (nearly 57% of the shares and more than 70% of the voting rights), Eric Vallat being managing director and Marie-Amélie de Leusse chairing the 12-member board of directors;
– Solid balance sheet reinforced by the payment of the dividend in shares, with net debt of €353 million, rated A and leverage reduced to 0.77.
Challenges
– Ambition to become the world leader in spirits with, for 2030 objectives, a gross margin of 72% by increasing their unit value and an operating margin of 33%;
– Innovation strategy focused on the growth of e-commerce, accelerated by partnerships, such as the one with Alibaba (1/5 of digital sales in China);
– “Sustainable exception” environmental strategy aiming for carbon neutrality by 2050:
– 2030 intermediate objective of a 50% reduction in emissions per bottle,
– sustainable agriculture for 100% of surfaces, with already 100% responsible purchasing, nearly 90% renewable electricity;
– Reinforcement of the whiskey division: launch of a product made in France, the 2nd country that consumes the beverage the most, and 2 Bruichladdich sales campaigns in China and the United Kingdom;
– Support for market valuation by controlling strategic stocks, estimated at more than €50 per share.
Challenges
– High seasonality of sales, hence the year ended March 31;
– Favorable currency impact of €110 to €120 million on sales and €55 to €60 million on operating profit for the current financial year;
– Another strong disparity in margins between cognac and other liqueurs and spirits;
– Inflation: increase in selling prices and, internally, control of structural costs;
– Investor concern about the expected “normalization” of consumption during the 2nd half, following two exceptional years;
– After a 21.1% increase in sales in the 1st half, expectations for 2022-23 confirmed: another year of strong sales growth, driven by exceptional spirits and improvement in the operating margin via the control of structural costs and sales price increases.
Find out more about the Agrifood sector
Soaring energy prices and a call for help
In the past, energy represented a fixed cost of 3% of turnover. This year, this percentage rises to 5% or even 7% for VSEs-SMEs, according to Ania (National Association of Food Industries). Professionals are very worried because until the end of 2022 they generally benefit from coverage to cushion these increases. However, they have not been renewed for 2023 and after. Consequently, 25 of the main inter-professional organizations (Intercereals, Inaporc, Semae, etc.) are calling on the State for help in the face of the erosion of their margins and their capacity to investment.
The State has proposed several devices, including an “electricity damper”, which are deemed insufficient. The organizations also deplore the failure of European negotiations to achieve a tariff shield to avoid distortions of competition. Agriculture and agri-food require a maximum ceiling price of €180/MWh, while many companies buy at prices above €500/MWh on the French market.