Remy Cointreau Q2 sales slow as Europe drags

PARIS - French spirits group Remy Cointreau said sales growth slowed sharply in the second quarter from a very strong first quarter, reflecting a weak economic climate in Europe but still robust demand in Asia and the United States for its premium cognac.

The maker of Remy Martin cognac, Cointreau liqueur and Mount Gay rum confirmed its goal for a significant improvement in earnings on Thursday but said it was continuing to monitor developments in a more uncertain environment in Europe.

In Asia-Pacific, Remy's top-selling region representing 60 per cent of the group's cognac sales, growth continued to be driven by premium bottles such as its Louis XIII cognac, which sells at an average price of 2,000 euros (S$3,200).

Asian demand for premium brands has helped shield luxury companies from the worst of the European slowdown, but with China on track for its slowest full year of growth since 1999, concerns are emerging, including over cognac sales.

The world's biggest spirits group, Diageo, said on Wednesday that a postponed duty free shipment and a weak South Korean market hampered quarterly trading in its Asia-Pacific region.

Remy, which has a market capitalisation of 4.4 billion euros, competes with Diageo and Pernod Ricard.

Remy said revenue rose to 324.1 million euros in the second quarter to Sept 30. Like-for-like sales growth was 5.3 per cent, with cognac sales rising 8 per cent.

This was below average expectations for 11.3 per cent like-for-like revenue growth in a Reuters poll of six analysts.

The slowdown had, however, been largely anticipated after Remy reported like-for-like sales growth of 24.4 per cent in the first quarter, with cognac sales rising 37.8 per cent, helped in part by restocking.

Remy Cointreau makes 38 per cent of overall sales in the buoyant Asia-Pacific region and 31 per cent in the US.

The group's liqueurs and spirits division posted a 0.4 per cent quarterly drop in organic revenue as sales of Metaxa liquor slowed, hit by the economic situation in Greece.

Remy Cointreau shares have gained 40 per cent this year, outperforming the European sector, which has added 18.8 per cent.

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