Ré my Cointreau Rebounds on Premium Spirits

PARIS—cognac maker Ré my Cointreau has successfully cut costs and sold more premium-branded liquor to offset the continuing slump in brandy demand in China, turning in sharply higher net profit in the year to end-March.

The French family-controlled drinks group, best known for its Ré my Martin cognac and Cointreau liqueur, said net profit rose 48% to €92.6 million ($107 million) from €62.4 million in the previous 12 months despite a 6.4% decline in revenue to €965 million. The group declared a 20% higher dividend of €1.53 a share.

The results represent a significant turnaround for the group under new Chief Executive Valé rie Chapoulaud-Floquet after net profit had halved on a steep drop in revenue in the previous fiscal year when the anticorruption drive by the Chinese government abruptly curbed the practice in China of giving gifts such as brandy and whiskey.

Ré my shares rose more than 7% in early trading on the Paris bourse.

Ré my has been among the hardest hit by the Chinese slump as the drinks maker has relied for more than half of its sales and margins on its flagship Ré my Martin cognac, for which China was one of the biggest markets. Ms. Chapoulaud Floquet, a former L'Oré al SA executive, took over as CEO of Ré my last fall.

Ré my said that revenue, adjusted for changes in currencies in the year, rose 0.6%, leaving operating profit 7.7% higher at €156.5 million.

"This modest growth reflects continued strength in the U.S. and positive trends in Europe, while ongoing destocking efforts during the first half of the year held back Asia's performance," the company said.

While sales of Ré my Martin remained under pressure despite buoyant demand in the U.S., Japan and Africa, the group said revenue from its liqueurs and other spirits, such as Metaxa brandy and St-Ré my premium cognac, rose 7.5% on a comparable basis.

Ré my said it plans to continue to focus selling more products in the range of $50 or more a bottle—the group hopes the segment will contribute as much as 65% of sales by 2020 compared with 45% today—while investing in newer markets like Africa, South East Asia, and Latin America.

Write to Inti Landauro at [e-mail]

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