By Dominique Vidalon and Emma Rumney
PARIS/LONDON (Reuters) -Remy Cointreau’s new chief executive said on Thursday he expects the French spirits maker to return to growth in the second half after cost cuts helped soften a first-half profit drop, as he outlined a plan to revive performance.
Shares in the maker of Remy Martin cognac and Cointreau liqueur rose 6% in early trade after first-half operating profit fell 13.6%, less steep than the 18.1% decline anticipated by analysts.
The company’s stock has tanked amid years of steep declines, repeated cuts to its sales forecasts and the scrapping of 2030 sales targets due to downturns in major markets in the U.S. and China.
‘START OF A NEW ERA’
In his first results statement since taking over in June, Chief Executive Officer Franck Marilly said the first six months of Remy’s year were challenging, but marked the “start of a new era”.
“Despite a persistently tough environment, we remain confident in our ability to return to growth in the second half.”
Marilly outlined five levers to boost performance, including reorganising operations, reallocating commercial resources and focusing investment on top priorities. He also pledged to improve “price agility while staying true to our value-driven strategy” as rivals undercut on price.
“All eyes will be on the new CEO, with today his first conference call, on any nuance in strategic direction,” Edward Mundy, an analyst at Jefferies, said.
“Investors need proof that earnings have hit their lows and that current challenges are temporary,” he added.
Remy makes some 70% of its sales from cognac, mostly in the United States and China, where Marilly faces persistently weak consumer sentiment and stretched finances that have seen its customers turn away from cognac.
The company has suffered more than its rivals as a sales boom in expensive spirits seen after the COVID-19 pandemic went into reverse, more recently exacerbated by tariffs on cognac imports in China and on EU goods entering the United States.
Remy’s first-half operating profit fell 13.6% on an organic basis, thanks to cost cutting.
It confirmed a previously reported 4.2% like-for-like sales drop for the first half, and its full-year forecast.
(Reporting by Dominique Vidalon; Editing by Alessandro Parodi, Christopher Cushing, Louise Heavens and Conor Humphries)
