FRANCE. Rémy Cointreau will take an estimated €10 million (US$11.8 million) hit on operating profit due to the impact of SARS on Asian operations and reduced travel affecting duty-free sales.
Chief financial officer Bruno Mouclier said he estimated SARS could result in a €25 million (US$29.4 million) impact on revenue between April and the end of July.
On a constant currency basis, that means revenue in the first quarter of the current financial year could be lower than the same period last year, Mouclier added. But chief executive Dominique Heriard-Dubreuil said the company believes the effect will have worn off by August as fears surrounding the virus ease.
The company will also take a hit from the weakness of the US dollar, which will trim €16 million (US$18.8 million) off operating profit in the 2003-2004 financial year. Rémy traditionally makes about 40% of its operating profit in US dollars.
Speaking at a news conference after Rémy reported an operating profit increase of +2.2% to €213.8 million (US$251.5 million) in the year ended March 31, Heriard-Dubreuil said: “We have good hedge cover for the exchange rate in place already.”
Heriard-Dubreuil said demand for Rémy products is holding up well in the US and that the company expects to benefit from a pick-up in economic activity there in the last three months of this year. “We can already see signs of improvement (in the US economy),” she said. “The morale is back.”
But she pointed out that April-June is typically Rémy Cointreau’s weakest quarter, accounting for about a fifth of full-year revenue. She said the company will continue with plans to sell off small, non-core operations, planning to raise up to €70 million (US$82.4 million) over the next 12-18 months.
