Remy Cointreau first-half profit falls 7.3%

French spirits group Remy Cointreau posted a 7.3 per cent fall in first-half like-for-like operating profit on Thursday, blaming soft demand for its premium cognac in China.

The maker of Remy Martin cognac, Cointreau liqueur and Mount Gay Rum, which enjoyed robust demand in the United States, its top market, kept its forecast for positive growth in current operating profit at constant exchange rates in the 2015/16 full year, excluding acquisitions and divestments.

Current operating profit for the six months to September 30th reached €107 million. On a reported basis, positive currency effects lifted profit by 4.7 per cent.

The performance was slightly below analysts’ expectations for €107.6 million in operating profit, according to a Thomson Reuters I/B/E/S poll.

The Remy Martin cognac division, which accounts for 80 per cent of group profit, saw its operating profit fall 5.8 per cent like-for-like to €85.9 million.

Cognac achieved a strong performance in the United States, driven by the success of the 1738 Accord Royal cognac. But this did not offset a decline in Asia-Pacific, the group said, blaming changes in its distribution network in China and cautious Chinese wholesalers.

The Unites States is now a bigger market for Remy Cointreau than China, accounting for slightly over 30 per cent of sales against nearly 20 per cent for China.

Remy Cointreau, like rivals LVMH, Diageo and Pernod Ricard, has been hit by the Chinese government's crackdown on ostentatious spending and slowing economic growth in the world's second-biggest economy.

Reuters