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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Remy Cointreau SA | EU:RCO | Euronext | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.65 | 0.87% | 75.65 | 75.60 | 75.75 | 75.90 | 74.50 | 75.00 | 20,317 | 15:23:35 |
Sharp drop in Current Operating Profit Solid execution of cost-cutting plan: €145m achieved vs €100m target Rémy Cointreau remains ahead of its 2030 strategic plan
Regulatory News:
Rémy Cointreau’s (Paris:RCO) consolidated sales came to €1,194.1 million in 2023-24, -19.2% on an organic basis (+16.2% from 2019-20). Sales as reported were down -22.9%, including -3.7% in currency effect due primarily to trends in the Chinese renminbi and the US dollar.
Current Operating Profit was €304.4 million, down -27.8% on an organic basis (+34.9% from 2019-20). Above and beyond a record level of comparison, this figure reflects the significant fall in sales, which was partly offset by meaningful cost-cutting that generated €145 million in savings, of which 45% will be structural. Current Operating Margin declined by -3.0 points on an organic basis to total 25.5%.
Sales - in € million (unless otherwise stated)
2023-24
2022-23
Reported change
Organic change
vs. 2022-23
vs. 2019-20
Sales
1,194.1
1,548.5
-22.9%
-19.2%
+16.2%
Gross margin (%)
71.2%
71.3%
-0.1 pts
-1.3 pts
+4.0 pts
Current Operating Profit
304.4
429.6
-29.1%
-27.8%
+34.9%
Current operating margin (%)
25.5%
27.7%
-2.3 pts
-3.0 pts
+3.4 pts
Net profit - Group share
184.8
293.8
-37.1%
-35.9%
+52.7%
Net margin (%)
15.5%
19.0%
-3.5 pts
-3.9 pts
+3.6 pts
Net profit – Group share excl. non-recurring items
194.8
296.6
-34.3%
-33.0%
+47.1%
Net margin excl. non-recurring items (%)
16.3%
19.2%
-2.8 pts
-3.3 pts
+3.3 pts
EPS Group share (€)
3.64
5.79
-37.1%
-35.9%
+50.0%
EPS Group share excl. non-recurring items (€)
3.84
5.85
-34.3%
-33.0%
+44.4%
Net debt /EBITDA ratio
1.68x
0.84x
+0.84x
+0.84x
-0.18x
Chief Executive Officer Eric Vallat commented:
We’ve come through a challenging year in which we moved swiftly to adapt our costs and optimize our structure, while calling for a major effort from our teams. I would like to take this opportunity to thank them, both for stepping up so quickly and for their willingness to take initiatives. In 2023, we also pursued our investment program, continued to innovate, and achieved major progress—in China, where our brands proved resilient and won market share; in Travel Retail, where business is now back above pre-Covid levels; and in e-commerce, where sales rose 20%. We also rolled out “The Sustainable Exception” roadmap. In a persistently uncertain macro-economic environment, these achievements will help us maintain a value-driven strategy rooted in our long-term vision. We are approaching the new year with determination and remain fully focused on recovery in the US market, where we are adopting more efficient sales structures and executing tightly focused initiatives designed to promote a recovery in growth.
Current Operating Profit by division
In €m (unless otherwise stated)
2023-24
2022-23
Reported change
Organic change
vs. 2022-23
vs. 2019-20
Cognac
265.7
405.2
-34.4%
-33.0%
+26.2%
As % of sales
34.1%
36.8%
-2.7 pts
-3.9 pts
+5.3 pts
Liqueurs & Spirits
56.7
48.1
+18.0%
+18.0%
+55.4%
As % of sales
14.6%
11.5%
+3.2 pts
+2.7 pts
+0.7 pts
Subtotal : Group brands
322.4
453.3
-28.9%
-27.6%
+30.4%
As % of sales
27.6%
29.8%
-2.2 pts
-3.0 pts
+2.8 pts
Partner brands
(0.3)
0.1
-
-
-
Holding company costs
(17.7)
(23.7)
-25.5%
-25.3%
-12.3%
Total
304.4
429.6
-29.1%
-27.8%
+34.9%
As % of sales
25.5%
27.7%
-2.3 pts
-3.0 pts
+3.4 pts
Cognac
Sales at the Cognac division declined -25.1% on an organic basis (+5.8% compared with 2019-20), including a -29.7% fall in volumes and a Price-Mix gain of +4.6%. This trend reflects both a significant decline in sales in the Americas—where the Group continued destocking while holding prices steady, despite a sluggish environment and fierce promotional pressure—and resilient sales in the APAC1 and EMEA2 regions.
Current Operating Profit was down -33.0% on an organic basis to total €265.7 million, representing a -3.9 pt decline in Current Operating Margin to 34.1% (+5.3 pts from 2019-20). This trend reflects the strong fall-off in sales and includes an erosion of -1.8 pts of the gross margin (from a record high basis of comparison) that followed a rise in production costs which was only partly offset by the April 2023 hike in sales prices. At the same time, heavy investments in marketing and communication continued (unchanged as a percentage of sales), with a more targeted approach on spending. Lastly, the Cognac division managed to mitigate the impact of the sales decline through major cutbacks in its overheads.
Liqueurs & Spirits
The Liqueurs & Spirits division reported sales down -4.6% on an organic basis (+47.4% from 2019-20), including a -6.4% fall in volumes and a Price-Mix effect of +1.8%. Tougher market conditions in the Americas took a toll, while the whiskey category slowed in China. The EMEA region proved resilient.
Current Operating Profit rose +18.0% on an organic basis to total €56.7 million, for a steep +2.7 pt rise in margin on an organic basis to 14.6% (+0.7 pts from 2019-20). This trend reflects both a strong rise in gross margin (+1.2 pts on an organic basis) in the wake of price increases rolled out last April, and tight management of overheads. At the same time, the Group continued to invest heavily in marketing and communications to lay the groundwork for future growth.
Partner Brands
Sales of Partner Brands were down -6.1% on an organic basis (+2.3% from 2019-20), undermined by adverse trends in the Benelux and the UK.
Current Operating Profit stood at -€0.3 million in 2023-24, compared with €0.1 million in 2022-23.
Consolidated results
Current Operating Profit (COP) came to €304.4 million, down -29.1% as reported (-27.8% on an organic basis). This includes a -27.6% organic fall in COP for Group Brands, and a -€6.0 million reduction in the holding company’s expenses that illustrates cost-cutting in a tough economic environment.
This figure includes a negative currency effect (-€5.7 million) linked primarily to adverse trends in the Chinese renminbi and the US dollar. The average euro-renminbi conversion rate worsened from 7.14 in 2022-23 to 7.79 in 2023-24, while the average collection rate (linked to the Group’s hedging policy) deteriorated from 7.38 in 2022-23 to 7.59 in 2023-24. The average euro-dollar conversion rate worsened from 1.04 in 2022-23 to 1.08 in 2023-24, and the average collection rate improved from 1.11 in 2022-2023 to 1.10 in 2023-24.
Current Operating Margin stood at 25.5%, down -3.0 points on an organic basis, and down -2.3 points as reported. This reflects the combined impact of:
Other operating income and expenses totaled -€12.8 million in 2023-24 compared with -€3.1 million in 2022-23, and consisted mainly of the cost of restructuring distribution networks in the United States and Europe.
Net financial expense stood at -€38.5 million in 2023-24 (vs -€17.6 million in 2022-23), amid higher interest rates and renewal of long-term credit lines.
Tax charges came to €69.4 million, setting the effective tax rate at 27.4% in 2023-24 (27.1% excluding non-recurring items). This compares with 28.4% in 2022-23 (28.3% excluding non-recurring items) and reflects geographical mix.
Net Profit Group share stood at €184.8 million, down -37.1% as reported (+52.7% on an organic basis when compared with 2019-20), setting net margin at 15.5%, down -3.5 points as reported.
EPS Group share totaled €3.64, down -37.1% as reported compared to 2022-23. Excluding non-recurring items, EPS came to €3.84.
Net debt stood at €649.7 million, or €113.1 million more than at 31 March 2023, following the strong drop in EBITDA. Even so, Free Cash Flow improved sharply in the second half to total +€13.8 million full year (of which +€112.8 million in the second half). The ratio of net debt/EBITDA was 1.68 on 31 March 2024 compared with 0.84 one year earlier.
Return on Capital Employed (ROCE) came to 15.5% on 31 March 2024, down -8.9 points (-8.6 pts on an organic basis). This followed a fall in profitability of Group brands combined with ongoing strategic purchases of eaux-de-vie and investments that weighed on capital employed.
At the annual general meeting to be held on 18 July 2024, the Board of Directors will propose the payment of an ordinary dividend of €2.0 per share. Payment will include an option payable in cash or shares for the totality of the dividend paid out. Subject to approval by shareholders, the Group’s majority shareholder ORPAR has informed Rémy Cointreau that it will ask for the 2023-24 dividend to be paid entirely in shares, demonstrating its confidence in the Group’s future growth.
“The Sustainable Exception”: supporting responsible growth
In 2019-20, Rémy Cointreau initiated a profound transformation of its business model to adapt to major climate change worldwide. Sustainable development is one of the four pillars supporting this transformation. The Sustainable Exception plan is an ambitious programme built on a clear vision, CSR-driven governance at all levels of the Group, and investments totaling €80 million over 10 years.
In 2023-24, Rémy Cointreau continued to roll out this plan and its efforts were rewarded. CDP was one body that recognized progress made by awarding the Group an A rating in the Climate category, an A- in Water, and Leader status in Suppliers. Westland became a certified BCorp during the year, and PHD Malts’ BCorp status was renewed.
New Generation Terroirs
To meet the challenges of adapting its terroirs to the hazards of climate change, Rémy Cointreau has continued to deploy its New Generation Terroirs plan. This is designed to:
For the past 10 years, Rémy Cointreau has worked to commit its entire supply of agricultural raw materials to environmental certification programmes (79% as of March 2024). But in the past 3 years, it has raised the bar further, targeting a conversion to regenerative agriculture and viticulture. Today around 40% of the estates it owns are already on board, and the Group is focused on committing all its suppliers to this approach, aiming to train 100% of its direct farmers and growers in regenerative farming practices by 2030 (6% as of March 2024).
Reducing Greenhouse Gases
In 2023-24, the Group’s total carbon footprint, including scopes 1, 2 and 3, stood at 167,459 tCO2eq, down -15.0% from the previous year. This was achieved on the back of a decline in volumes produced and all the actions implemented by the Group throughout its value chain.
Water Stewardship Plan
In 2023, the Group revised its approach to sustainable water management under a Water Stewardship Plan designed to structure and accelerate implementation.
This Plan calls for action on three fronts:
A total of 210,663 m3 of water were used in 2023-24, down -19.0%.
2024-25 objectives
Despite the sharp fall in its 2023-24 results, Rémy Cointreau continues to exceed milestones set for its 10-year strategic plan. 2024-25 will be a year of transition, with highlights including finalization of destocking in the Americas, and 2025-26 will mark a resumption of the trajectory and targets set for 2029-30:
In a complex environment with limited visibility in its main markets, Rémy Cointreau anticipates a gradual recovery in sales over the course of 2024-25, with the first half affected by:
Against this backdrop, Rémy Cointreau is determined to use tight cost controls and its value-driven strategy to protect its profitability, while continuing to make the investments needed for tomorrow’s growth.
In 2024-25, the Group will build on:
Lastly, Group forecasts of the currency effects call for:
2029-30 objectives confirmed
Rémy Cointreau reiterates both its financial and extra-financial targets for 2029-30, and its aim to become the global leader in exceptional spirits.
The Group targets a gross margin of 72% and a Current Operating Margin of 33% based on 2019-20 consolidated scope and exchange rates.
As part of The Sustainable Exception plan, Rémy Cointreau aims to train and engage 100% of its direct partners in agriculture in regenerative agriculture practices, targeting a 50% reduction in carbon emissions per bottle by 2030. This is the first step towards achieving zero net carbon status in 2050—a trajectory compatible with holding global warming to +1.5°C as validated by the Science Based Target Initiative (SBTI). Lastly, the Group is aiming to reduce water withdrawals at its production sites by -20% per liter of alcohol produced by 2030.
A webcast for investors and analysts will be held today, starting at 9.00 (CET) with Marie-Amélie de Leusse, Chairwoman; Eric Vallat, CEO; and Luca Marotta, CFO. Presentation slides are available online at www.remy-cointreau.com under “Finance”.
Appendices
Sales and Current Operating Profit by division
€m (unless otherwise stated)
2023-24
2022-23
Change
Reported
A
Organic
B
Reported
C
Reported
A/C-1
Organic
B/C-1
Sales
Cognac
778.6
823.9
1,100.0
-29.2%
-25.1%
Liqueurs & Spirits
387.8
399.6
418.9
-7.4%
-4.6%
Subtotal: Group Brands
1,166.5
1,223.5
1,518.9
-23.2%
-19.4%
Partner Brands
27.7
27.8
29.6
-6.6%
-6.1%
Total
1,194.1
1,251.3
1,548.5
-22.9%
-19.2%
Current Operating Profit
Cognac
265.7
271.4
405.2
-34.4%
-33.0%
As % of total sales
34.1%
32.9%
36.8%
-2.7 pts
-3.9 pts
Liqueurs & Spirits
56.7
56.7
48.1
+18.0%
+18.0%
As % of total sales
14.6%
14.2%
11.5%
+3.2 pts
+2.7 pts
Subtotal: Group Brands
322.4
328.1
453.3
-28.9%
-27.6%
As % of total sales
27.6%
26.8%
29.8%
-2.2 pts
-3.0 pts
Partner Brands
(0.3)
(0.3)
0.1
-
-
Holding Company costs
(17.7)
(17.7)
(23.7)
-25.5%
-25.3%
Total
304.4
310.1
429.6
-29.1%
-27.8%
As % of total sales
25.5%
24.8%
27.7%
-2.3 pts
-3.0 pts
Summary income statement
€m (unless otherwise stated)
2023-24
2022-23
Change
Reported
Organic
Reported
Reported
Organic
A
B
C
A/C-1
B/C-1
Sales
1,194.1
1,251.3
1,548.5
-22.9%
-19.2%
Gross margin
850.2
876.3
1 103.8
-23.0%
-20.6%
Gross margin (%)
71.2%
70.0%
71.3%
-0.1 pts
-1.3 pts
Current Operating Profit
304.4
310.1
429.6
-29.1%
-27.8%
Current operating margin (%)
25.5%
24.8%
27.7%
-2.3 pts
-3.0 pts
Other non-current income and expenses
(12.8)
(13.1)
(3.1)
-
-
Operating profit
291.6
297.0
426.5
-31.6%
-30.4%
Net financial result
(38.5)
(39.0)
(17.6)
+118.7%
+121.3%
Profit before Tax
253.2
258.0
408.9
-38.1%
-36.9%
Corporate income tax
(69.4)
(70.8)
(116.3)
-40.3%
-39.2%
Tax rate (%)
-27.4%
-27.4%
(28.4%)
+1.0 pts
+1.0 pts
Share in profit (loss) of associates/minority interests
1.1
1.1
1.2
-12.1%
-12.1%
Net profit – Group share
184.8
188.3
293.8
-37.1%
-35.9%
Net margin (%)
15.5%
15.1%
19.0%
-3.5 pts
-3.9 pts
Net profit – Group share excl. non-recurring items
194.8
198.6
296.6
-34.3%
-33.0%
Net margin excl. non-recurring items (%)
16.3%
15.9%
19.2%
-2.8 pts
-3.3 pts
EPS Group - share (€)
3.64
3.71
5.79
-37.1%
-35.9%
EPS Groupe – share excluding non-recurring items (€)
3.84
3.92
5.85
-34.3%
-33.0%
Reconciliation of net profit and net profit excluding non-recurring items
In €m
2023-24
2022-23
Net profit – Group share
184.8
293.8
Other operating income and expenses
12.8
3.1
Tax on “other operating income and expenses”
(2.8)
(0.4)
Net profit - Group share excluding non-recurring items
194.8
296.6
Cash-Flow statement
As of March 31 (in €m)
2024
2023
Change
Opening net financial debt (April 1st)
(536.6)
(353.3)
-183.3
Gross operating profit (EBITDA)
356.4
481.6
-125.2
WCR for eaux-de-vie and spirits in ageing process
(116.9)
(152.6)
+35.7
Other working capital items
(27.2)
(42.0)
+14.8
Capital expenditure
(80.9)
(75.6)
-5.3
Financial expenses
(24.7)
(13.3)
-11.4
Tax payments
(88.4)
(140.4)
+52.0
Net flows on other non-current income and expenses
(4.5)
(9.2)
+4.7
Free Cash-Flow
13.8
48.6
-34.8
Dividends
(152.7)
(111.0)
-41.7
Capital increase / share buyback
-
(162.7)
+162.7
OCEANE conversion impact on Financial debt
50.8
42.9
+7.9
Conversion differences and others
(24.9)
(1.1)
-23.9
Other Cash flow
(126.8)
(231.9)
+105.1
Total cash flow for the period
(113.1)
(183.3)
+70.2
Closing net financial debt (March 31)
(649.7)
(536.6)
-113.1
A Ratio (Net debt/EBITDA)
1.68
0.84
0.84
Balance sheet
As of March 31 (in €m)
2024
2023
Non-current assets
1,037.3
1,004.4
Current assets
2,333.4
2,182.5
o/w inventories
1,962.8
1,815.8
o/w Cash and equivalent
93.0
73.7
Total Assets
3,370.7
3,187.0
Shareholders’ equity
1,845.6
1,755.1
Non-current liabilities
590.3
396.5
o/w Long term financial debt
514.9
325.1
Current Liabilities
934.8
1,035.3
o/w Short-term financial debt
227.8
285.3
Total Liabilities and Shareholders’ equity
3,370.7
3,187.0
Definitions of alternative performance indicators
Due to rounding, the sum of values presented in this document may differ from totals as reported. Such differences are not material.
Rémy Cointreau’s management process is based on the following alternative performance indicators, selected for planning and reporting purposes. The Group’s management considers that these indicators provide users of the financial statements with useful additional information to help them understand the Group’s performance. These alternative performance indicators should be considered as supplementing those included in the consolidated financial statements and the resulting movements.
Organic growth in sales and Current Operating Profit
Organic growth is calculated excluding the impact of exchange rate fluctuations, acquisitions and disposals. This indicator serves to focus on Group performance common to both financial years, which local management is more directly capable of measuring.
The impact of exchange rates is calculated by converting sales and Current Operating Profit for the current financial year using average exchange rates (or, for Current Operating Profit, the hedged exchange rate) from the previous financial year.
For acquisitions in the current financial year, sales and Current Operating Profit of acquired entities are not included in organic growth calculations. For acquisitions in the previous financial year, sales and Current Operating Profit of acquired entities are included in the previous financial year; however, they are only included in current year organic growth calculations with effect from the anniversary date of the acquisition.
For significant disposals, data is post-application of IFRS 5, under which results of entities disposed of are systematically reclassified under “Net earnings from discontinued operations”.
Indicators “excluding non-recurring items”
The two items set out below constitute key indicators for measuring recurring business performance, since they exclude significant items which, by virtue of their unusual nature, cannot be considered inherent to the Group’s ongoing performance:
Gross operating profit (EBITDA)
This measure, which is used in particular to calculate certain ratios, equates to Current Operating Profit less amortization and depreciation expenses on intangible assets and property, plant and equipment for the period, expenses arising from stock option plans, and dividends received from associates during the period.
Net debt
Net financial debt as defined and used by the Group is equal to the sum of long- and short-term financial debt and accrued interest, less cash and cash equivalents.
About Rémy Cointreau
All around the world, there are clients seeking exceptional experiences; clients for whom a wide range of terroirs means a variety of flavors. Their exacting standards are proportional to our expertise – the finely-honed skills that we pass down from generation to generation. The time these clients devote to drinking our products is a tribute to all those who have worked to develop them. It is for these men and women that Rémy Cointreau, a family-owned French Group, protects its terroirs, cultivates exceptional multi-centenary spirits and undertakes to preserve their eternal modernity. The Group’s portfolio includes 14 singular brands, such as the Rémy Martin and Louis XIII cognacs, and Cointreau liqueur. Rémy Cointreau has a single ambition: becoming the world leader in exceptional spirits. To this end, it relies on the commitment and creativity of its 1,943 employees and on its distribution subsidiaries established in the Group’s strategic markets. Rémy Cointreau is listed on Euronext Paris.
Regulated information in connection with this press release can be found at www.remy-cointreau.com
______________________________________ 1 Asia-Pacific 2 Europe, Middle East and Africa 3 Wholesalers’ sales to retailers
View source version on businesswire.com: https://www.businesswire.com/news/home/20240605581141/en/
Investor relations: Célia d’Everlange / investor-relations@remy-cointreau.com Media relations: Mélissa Lévine / press@remy-cointreau.com
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