(AOF) – Rémy Cointreau has carried out an unlisted and unrated private bond placement for a total amount of 380 million euros with maturities of 7, 10 and 12 years (i.e. an average maturity of 10 years) accompanied by a weighted average coupon of 5.58%. The bonds were subscribed by a selection of international institutional investors, confirming the market’s confidence in Rémy Cointreau’s business model and the quality of its credit profile. Rémy Cointreau is rated Baa3, stable outlook by Moody’s.
As part of the active management of its financing needs, this issue allows Rémy Cointreau to increase its financial flexibility, diversify its financing sources and extend the average maturity of its debt, in line with its strategic assets.
The net proceeds from the issue will be allocated to the general needs of the group.
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Key points
– Spirits group born in 1703, with 12 global brands -Remy Martin and Louis XIII for cognacs, diversified in liqueurs and spirits with Cointreau and Metaxa for spirits, Mount Gay for rum, The Botanis for gin and, for whisky, Bruichladdich, Port Charlotte, Ocformore, Westlan and Hautes Glaces;
– Sales of €1.55 billion distributed between 2 divisions – cognac for 71%, liqueurs and spirits for 27%;
– International positioning, the United States being the group’s leading market (50% of sales in the Americas), ahead of Asia-Pacific (33%) and the rest of the world;
– Business model: become the world number 1 in exceptional spirits and control the distribution channel (85% of sales), in order to control the sales prices of exceptional spirits, at a unit price above $50;
– Capital controlled by the founding families (55% of the shares and 70% of the voting rights), Eric Vallat being general director and Marie-Amélie de Leusse president of the board of directors of 12 members;
– Solid balance sheet reinforced by the payment of the dividend in shares, with A-rated net debt of 536 million euros giving a leverage effect of 0.86.
Challenges
– 2029/30 strategy aimed at becoming the world no. 1 in exceptional spirits:
– share of exceptional spirits increased to 65% of sales the share of spirits
– gross margin of 72% and operating margin of 33%;
– “Sustainable Exception 2025” environmental strategy aiming for zero in 2050 and validated by the SBTi:
– by 2025, identification of all climate-resistant varieties and eco-design of bottles,
– by 2030, training of all agricultural partners in agroecology, full use of renewable energies and halving of CO2 emissions per bottle;
– Support for the decline in securities by the importance of stocks;
– Future of diversification in luxury perfumery with Maison Psyché;
– Continued recovery in the liqueurs and spirits business, 3 times lower than that of cognac which contributes to 94% of operating profit.
Challenges
– Strong seasonality of sales, hence a financial year postponed to March 31;
– Inflation in production costs offset by price increases and cost savings;
– Negative impact of currencies on revenues (from €50 to €60 million) and on operating income (from €10 to €15 million) for the current financial year;
-After a record financial year (71.3% gross margin), 2022/23 expectations: after a decline in the first half, reflecting the normalization of consumption in the United States, towards stability in revenues and profits and advertising investments and industrial assets of around €180 million;
– 2021/22 dividend of €3 including €1 of exceptional dividend for results and prospects.
Learn more about the Agri-food 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 VSE-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 are not renewed for 2023 and after. Consequently, 25 of the main inter-professional organizations (Intercéales, 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 shock absorber”, which are considered insufficient. The organizations also deplore the failure of European negotiations to achieve a price shield to avoid distortions of competition. Agriculture and agri-food demand a maximum ceiling price of €180/MWh while many companies buy at prices above €500/MWh on the French market.