Rémy Cointreau profits soar despite sales fall

Rémy Cointreau has seen its net profits grow by almost 50% in 2014/15, however sales continued to fall in the wake of its lost US distribution deal with Edrington.

Rémy Cointreau has reported a 48.5% profit increase in 2014/15, following a dramatic decline of 46% in the previous year

The French drinks group revealed its sales had dropped 6.4% to €965 million in its latest full-year financial results, but net profits soared 48.5% from €62.4m to €92.6m.

The firm attributed its progress to “continued strength in the US and positive trends in Europe”, while both destocking efforts in China and a terminated distribution with Edrington in the US hindered led to losses in the first half of the year.

Rémy Cointreau predicted a return to growth during the announcement of its 2013/14 results, when net profits plummeted by 46.9%.

This decline was largely attributed to both China’s clampdown on extravagant spending, which hit sales of its flagship Rémy Martin Cognac, and Edrington’s move to set up wholly owned sales, marking and distribution company in the US.

As such, the group still has some way to go to match the €151.5m profits reported in 2012/13.

Sales of its Rémy Martin Cognac brand slipped 6.4% from €125.4m to €117.4m due to on-going struggles in China. However, its parent company said another year of “high growth” was recorded in the US, which is now Rémy Martin’s largest market, overtaking China.

Rémy Cointreau also said its staple Cognac brand was continuing to “pursue its strategy of moving upmarket”, withdrawing its VS variants from the US market and continuing to launch high-end bottlings in travel retail.

Contrastly, sales of its Liqueurs and Spirits division, including Mount Gay Rum, Metaxa, Cointreau liqueur and Bruichaladdich grew 35% to €50.2m.

Bruichladdich’s sales almost doubled thanks to “the growing contribution of its single malt Scotch whisky brands and The Botanist gin within the Rémy Cointreau network”, while Cointreau increased its foothold in the US.

Metaxa offset declines in Russia – a result of the region’s social and political turmoil – with double-digit growth in Germany and Central Europe, and Mount Gay rum boasted a “solid performance”.

Looking forward to the next 12 months, the group said: “Confident in its acceleration strategy of moving upmarket, the Rémy Cointreau Group anticipates growth in its current operating profit, at constant exchange rates and scope, over the course of the 2015/16 financial year.”