Rémy Cointreau builds for the future

FRANCE. Rémy Cointreau Group reports flat sales in the six months ended 30 September but successful price increases and important developments in the US and China.

Highlights of the period included increased marketing expenditure for the leading brands in key markets, sustained growth in China and the US and a good performance by premium vodka in Poland.

At the same time, ongoing rationalisation within the Group resulted in a reduction in operating costs and the ongoing disposal of non-core assets.

The company said that following SARS and the Iraq War in the first half of the year – and the measures taken during that period – there should be a marked improvement in performance from the second half of the 2003/04 financial year.

Sales for the first half of 2003 were flat on a like-for-like basis, sustained by the dynamism of vodka and champagne sales. These offset the decline in Cognac (-4.1% on a like-for-like basis) and liqueurs (-8.5%). Other spirits overall experienced sales up +18.2%. In Europe the market situation varied country-by-country.

Following a first quarter marked by exceptional events, Cognac sales recovered in the second quarter due to sustained growth in China and the US, which was particularly noteworthy as it followed a +3% price increase. In Europe, the situation varied from country to country. Against this background, operating profit in Cognac fell by -4.9% at constant exchange rates.

The -8.5% decline in sales of liqueurs, at constant exchange rates, did not reflect the underlying commercial progress that was achieved said Rémy. This was a result of the disruption caused by the recent change of distributor in Japan, a forthcoming change in Puerto Rico, the transfer of the production of Ponche Kuba liqueur to Barbados and poor trading conditions in Netherlands (due to an increase in excise duties). Restated for these specific factors, sales of liqueurs grew by +2% at constant exchange rates.

The strong +18.2% growth in sales of other spirits on a like-for-like basis was principally due to sales of premium vodka in Poland and eastern Europe, which more than doubled. The other brands in the portfolio remained stable overall, with the exception of genevers in Netherlands.

Sales of Champagne grew by +6.1% at constant exchange rates, whilst confirming its recovery with a +77.5% increase in operating profit at constant exchange rates. The parameters of product/market mix and price, with stable volumes, moved positively to contribute to the strong growth in profit.

Total Group operating profit fell by €21.2 million (US$25.9 million) to €72 million (US$87.8 million) due to exchange rate movements of €15.6 million (US$19.0 million), principally as a result of the appreciation of the Euro.

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