By Dominique Vidalon and Emma Rumney
PARIS/LONDON (Reuters) -French spirits group Remy Cointreau missed fourth-quarter sales forecasts on Wednesday, but said it saw a “steep recovery” in the critical U.S. market, which has been dragging on performance for over a year.
The maker of Remy Martin cognac and Cointreau liqueur has been grappling with problems in both the U.S. and China, which account for most of its cognac sales.
Remy also faces steep tariffs in China as part of a Beijing-Brussels trade dispute, which has also seen duty-free sales of cognac in China halted. In the U.S., tariffs affecting its cognac are currently on pause.
Sales in the U.S. had spiralled due to high inflation and interest rates, and Remy said in January that the fourth quarter was the earliest possible timing for a U.S. recovery.
However, Americas cognac sales, driven by the U.S., had “rebounded sharply” in the period, Remy said, citing a “very favourable” comparison base. Cognac sales in the region declined significantly last year.
An action plan for the cheapest version of Remy Martin cognac – the most popular in the U.S. – was having a positive impact, it continued.
These early signs of recovery “could have legs” if the consumer environment in the U.S. does not deteriorate further from here, said Edward Mundy, analyst at Jefferies, adding tariffs were a risk.
Remy’s shares rose 1.38% in early trade.
The U.S. news contrasted with a sharper-than-expected fourth quarter fall in overall sales and cognac sales, which account for 70% of Remy’s business.
The period may mark the last full quarter for CEO Eric Vallat, whose resignation was announced earlier in April, effective this summer.
Group sales fell 19%, compared with average analysts’ expectations of a 17.9% decline in a company-compiled consensus. Sales dropped in China, too, with Remy citing a range of factors including tough market conditions.
The company left its annual and longer-term guidance spanning the period until 2029-30 unchanged, saying it expects to resume progress towards its aims of high single-digit sales growth from its next financial year onwards.
Rivals Diageo and Pernod have both either cut or withdrawn longer term sales targets deemed overly ambitious by some investors given sales declines across the spirits sector.
It announced a new cost-cutting plan of more than 50 million euros ($56.88 million) to protect margins.
($1 = 0.8791 euros)
(Reporting by Dominique Vidalon in Paris and Emma Rumney in London; Editing by Sudip Kar-Gupta, Kim Coghill and Jan Harvey)
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