FRANCE. French drinks group Rémy Cointreau reported a strong annual performance for the year ended March 2011, with a substantial upswing in operating profit. Rémy Martin Cognac turned in “remarkable” results, boosted by sales in travel retail and in Russia.
According to its consolidated preliminary results, turnover for the year ended 31 March 2011 climbed by +12.4% (up +6.4% organically), with a +17.6% growth in operating profit to €167 million (up +8% organically).
Operating profit margin improved to 18.4%, compared with 17.6% the previous year, despite an increase in marketing investment during the year, the company said.
Excluding the reclassification of the Champagne division, operating profit would have grown by 21.6% in published data and 11.2% organically, reflecting the “very strong” performance of the group’s operations worldwide, it added.
Net profit, excluding non-recurring items (principally the impairment of the Metaxa brand) was €107.5 million, up +16.7% compared with the previous year.
The 2010/11 financial year was marked by the disposal of the Champagne division, concluded after the year-end. On 31 May 2011, the group signed an agreement with EPI for the disposal of the Champagne division. Rémy Cointreau will continue as sole distributor of Piper-Heidsieck, Charles Heidsieck and Piper Sonoma, the US sparkling wine brand. This division is now classified within Partner brands.
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Rémy Martin turns in “remarkable performance”
Once again this year, Rémy Martin Cognac reported a remarkable performance with a +12.1% advance in turnover to €486 million and a +20.3% rise in operating profit to €140.5 million, under the combined effect of price increases, the continued move upmarket and the excellent performance of premium Cognacs, in particular in Asia, which became the leading region for the brand. Travel retail and Russia were also major growth drivers.
Operating margin improved substantially to 28.9% (28% organic) compared with 26.1% the previous year, even though support for that brand was increased.
Overall turnover in the Liqueurs & Spirits division was €208 million, a moderate decline compared with the previous year. Cointreau and Mount Gay Rum both reported growth but were unable to offset the decline in sales of Metaxa, which continued to suffer from difficult market conditions in Greece, and the a fall in sales of Passoa in certain European markets.
Operating profit and operating margin both declined to €42.6 million and 21%, respectively, thanks, in part, to continued high marketing investment to support key brands.
Turnover in the Partner brands division was €213.8 million and operating profit was €2.1 million, after reclassification of the Champagne division into Partner brands.
Partner brands, excluding Champagne, achieved a turnover of €110.5 million, +6.2% higher, primarily due to Scotch whisky in the US and travel retail. Operating profit was €2.6 million.
This year, the Champagne division benefited from a recovery in demand and reported growth of +4.6% in turnover, together with an operating profit of €2.8 million, compared with a loss of €4 million the previous year.
Consolidated results
Turnover was €907.8 million, an increase of +12.4% (+6.4% organic).
Current operating profit was €167.0 million, which represented growth of +17.6% (up +8% organically), whereas the operating margin grew strongly to 18.4% compared with the previous year. This performance was primarily achieved thanks to a robust improvement in gross profit and despite increased advertising and marketing investment. Organic operating margin for group brands was 25.9%.
Operating profit was €120.5 million after taking into account other operating expenses, which primarily included the €33.5 million after tax impairment charge on the Metaxa brand.
The group’s share of net profit, excluding non-recurring items, was €107.5 million, a rise of +16.7% compared with the previous year. The group’s share of net profit was €70.5 million after the provision recognised in relation to the Metaxa brand.
Outlook
Rémy Cointreau said it remains “strongly attached” to its long-term value strategy.
“The disposal of the Champagne division is fully consistent with the development of this strategy and, in particular, will fund accelerated growth in major current markets as well as in markets with strong potential for future growth. The group will also look closely at other growth opportunities should they present themselves,” the company continued.
“An ambitious strategy focused on high value-added products, supported by a strong policy of product innovation and served by an efficient distribution network, will provide the group with the necessary resources to ensure steady, profitable growth,” it concluded.
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