Excellent annual performance
Sharp increase in the current operating
margin at 20.7%
Net profit (excluding non-recurring items)
up 22.3%
Regulatory News:
Rémy Cointreau’s (Paris:RCO) sales for the financial year ended
31 March 2017 totalled €1,094.9 million, representing reported
growth of 4.2%. In organic terms (at constant exchange rates and
scope), growth amounted to 4.7%, due to the outstanding
performance of the Group Brands (+7.4%).
The Current Operating Profit grew 26.7% to €226.1
million, driven by organic growth of 13.8% and very favourable
currency effects. Thus, the Group's operating profitability
reached 20.7% (up 3.7 points), due to the excellent
performance of our exceptional spirits (> USD50) and a
controlled increase in communication investments and overheads.
Consolidated net profit (Group share) grew 85.7% to €190.3 million.
Excluding non-recurring items, net profit was €135.0 million, an
increase of 22.3%.
Key figures
(€ millions)
at 31 March
2017
at 31 March
2016
Change
Published Published
Published Organic(*) Sales
1,094.9 1,050.7
4.2% +4.7%
Current operating profit 226.1
178.4
+26.7% +13.8% Current operating margin
20.7% 17.0% +3.7pts +1.5pts Net profit (Group share)
190.3 102.4 +85.7% +73.5%
Net profit excluding
non-recurring items 135.0 110.4
+22.3%
+10.5% Net margin excluding non-recurring items
12.3%
10.5% +1.8pts +0.6pt EPS (Group share)
3.87 2.11 +83.4% -
EPS excluding non-recurring items
2.75 2.27 +21.1% - Net
debt/EBITDA ratio
1.78 2.29 -0.51
-
Current operating profit by
division
(€ millions)
at 31 March
2017
at 31 March
2016
Change
Published Published
Published Organic(*) House of Rémy Martin
185.2
139.7 +32.6% +19.9% as % of sales
26.2% 21.6% +4.6pts
+1.9pts Liqueurs & Spirits
57.5 48.0 +19.9% +9.7% as %
of sales
20.8% 17.5% +3.3pts +1.5pts
Sub-total Group
brands 242.7 187.6
+29.3% +17.3% as % of
sales
24.7% 20.4% +4.3pts +1.8pts Partner brands
2.0
6.1 (66.9%) (72.4%) as % of sales
1.8% 4.8%
-3.0pts -3.3pts Holding company costs
(18.6) (15.4) +21.1% +21.8%
Total 226.1 178.4
+26.7% +13.8% as %
of sales 20.7% 17.0%
+3.7pts
+1.5pts
(*) Absolute values and organic growth are calculated at
constant exchange rates and scope.
The House of Rémy Martin
The accelerated organic sales growth of The House of Rémy Martin
(+10.0%) in 2016-17 was driven by the excellent performance of the
Americas and Asia-Pacific regions. In particular, Greater China saw
a marked increase in private consumption during the second half of
the year.
In this buoyant context, the Rémy Martin and LOUIS XIII brands
pursued their strategy of focusing on their high-end products with
a number of initiatives, including the launch of the LOUIS XIII
Mathusalem and a new Rémy Martin XO decanter. LOUIS XIII also
brought about a change in industry codes to offer its customers an
ultimate experience by opening a boutique in a Beijing shopping
centre, amid the finest luxury brands.
The Current Operating Profit amounted to €185.2 million,
up 19.9% in organic terms and the operating margin was 26.2%, an
organic increase of 1.9 points (+4.6 points in published terms).
Very favourable mix and price effects largely offset a double-digit
increase in communication investments and an increase in
distribution costs dedicated to the upmarket qualities of the House
of Rémy Martin.
Liqueurs & Spirits
In 2016-17, the organic growth in sales of Liqueurs &
Spirits (+1.3%) was mitigated by the deconsolidation of Passoã's
sales from 2 December 2016 (brand now managed by a joint venture
under the control of Lucas Bols). It therefore masks a solid growth
in the division's brands (+4%) over the 12-month period.
In January 2017, the Group acquired two Single Malt whisky
brands, consolidated in the Liqueurs & Spirits division:
Domaine des Hautes Glaces and Westland. As these distilleries are
at the early stages of their development, they did not make a
significant contribution to the sales over the period.
The Current Operating Profit totalled €57.5
million, an organic increase of 9.7%, led by the positive sales
leverage of Cointreau, Metaxa and The Botanist over the financial
year. Thus, despite an increase in communication investments, the
current operating margin was 20.8% at the end of March,
representing an organic increase of 1.5 points (+3.3 points in
published terms).
Partner Brands
The fall in sales can be explained by the end of the agreement
for the distribution of champagne brands (Piper-Heidsieck and
Charles Heidsieck) in France, Belgium and in Travel Retail, while
sales of other partner brands continue to perform well in the EMEA
region.
The reduction in the Current Operating Profit (organic
decline of 72.4% to €2.0 million), is primarily attributable
to the change in the portfolio of partner brands during the
financial year.
Consolidated results
The Current Operating Profit amounted to €226.1 million,
representing organic growth of 13.8%. The reported growth (+26.7%)
also includes a positive currency effect of €23.6 million
(favourable hedging policy during the financial year) and a loss of
€0.6 million, corresponding to the scope effect of the two Single
Malt whisky brands acquired in January 2017.
As a result, the current operating margin grew 3.7 points to
20.7% (+1.5 points in organic terms).
Operating profit was €221.3 million, after taking
into account a net non-recurring expense of €4.8 million, primarily
associated with the costs of reorganising the distribution
network.
Net financial expenses amounted to €31.9 million,
an increase of €4.6 million over the year. Although gross finance
costs declined over the year (due to a partial refinancing of the
Group's debt under very favourable conditions in September 2016),
foreign exchange result deteriorated by €6.2 million, primarily due
to the valuation of the portfolio of hedging instruments according
to IFRS standards.
The income tax charge was €44.5 million, stable compared
to last year, thanks to a non-recurring deferred tax income of
€14.1 million (reduction in the French tax rate voted in the 2017
finance act). Adjusted for this non-recurring item, the
effective tax rate amounted to 31.0%, which represents an
increase compared to the 2016 March rate (29.1%). This was due to a
less favourable geographical mix during the fiscal year.
The share in profits of associates was a loss of €19.6
million. It includes a new adjustment in the value of the
participating interest in Dynasty Fine Wines Ltd. As Dynasty has
not published its accounts since 2012, Rémy Cointreau has carried
out another assessment of its participating interest.
The net profit after tax from deconsolidated and discontinued
operations amounted to €65.0 million at 31 March 2017.
This profit is a result of the contribution operation carried out
during the creation of the Passoã joint venture. As the entity is
under the operational and financial control of Lucas Bols N.V, it
is not consolidated. In return, a financial asset was recorded on
the Rémy Cointreau Group's balance sheet.
The net profit (Group share) therefore reached €190.3
million, up 85.7%.
Excluding non-recurring items (+€55.3 million), the net
profit (Group share) was €135.0 million, up 22.3% and
the net margin showed an increase of 1.8 points to 12.3%.
Net earnings per share (excluding non-recurring items)
reached €2.75 (+21.1%).
Net debt totalled €390.1 million at 31 March 2017,
a reduction of €68.1 million over the financial year, due to the
excellent cash generation from operations, which largely offset the
investment cost of the two Single Malt whisky brands.
Therefore, the "net debt/EBITDA" ratio markedly
improved at 1.78 at the end of March 2017 versus 2.29 at the
end of March 2016.
The return on capital employed (ROCE) reached
21.2% at 31 March 2017, representing a healthy increase of 3.9
points over the financial year.
A dividend of 1.65 euro per share (i.e. an increase of
3.1%) shall be put to a shareholders' vote at the general meeting
on 25 July 2017. Payment will be with an option in cash or in
shares for the entire dividend distributed. The dividend payment
formalities shall be brought forward this year. The option period
shall be effective from 1 August to 25 August 2017, and the
dividend shall be paid in cash beginning on 4 September 2017.
Outlook
Due to its unique business model and its portfolio of
exceptional spirits, the Rémy Cointreau Group pursues its long-term
strategy of focusing on its high-end products, founded on the
excellence of terroirs, the mastery of savoir-faire and the
importance of time.
By 2019-20, bolstered by a significant development in its
profitability over the last two years, the Group is now
anticipating a current operating margin between 21.5% and
22.5% (compared with 18.0% and 20.0% previously). This new
target is based on a euro-dollar parity of 1.11 (compared with 1.30
for the initial target set in June 2015, on the basis of the
2014-15 results) and the scope at the end of March 2017.
For 2017-18, Rémy Cointreau is anticipating another year of
growth in its Current Operating Profit, at constant exchange rates
and scope.
Definitions of alternative performance
measures
Rémy Cointreau's management process is based on the following
alternative performance measures, chosen for scheduling and
reporting. The Group's management considers that these measures
provide useful additional information for users of financial
statements to understand the Group's performance. These alternative
performance measures must be considered complementary to those
shown in the consolidated financial statements and the transactions
resulting therefrom.
Organic growth in sales and in Current Operating Profit
(COP)
Organic growth is calculated by excluding the impacts of
exchange rate fluctuations in addition to acquisitions and
disposals. This measure emphasises the Group's performance over the
two financial years, a performance that local management is able to
influence more directly.
The impact of exchange rates is calculated by converting the
sales and the Current Operating Profit for the current financial
year into average exchange rates (or into the hedged exchange rate
for the Current Operating Profit) for the previous financial
year.
For the current financial year's acquisitions, the sales and the
Current Operating Profit of the acquired entity are excluded from
the organic growth calculations. For the previous financial year's
acquisitions, the sales and Current Operating Profit of the
acquired entity are included in the previous financial year, but
are only included in the calculation of the organic growth over the
current financial year from the anniversary date of
acquisition.
In the event of a major disposal, the data is used after
applying IFRS 5 (which systematically reclassifies the assigned
entity's results as "net profit from discontinued operations" for
the current financial year and the previous financial year).
The "excluding non-recurring items" measures
The 2 measures referred to below correspond to key indicators
for measuring recurring business performance, by excluding
significant items which, due to their nature and non-habitual
character, cannot be considered as inherent to the Group's current
performance:
- Current Operating Profit:
Current Operating Profit corresponds to the operating profit before
other non-current operating income and expenses.
- Net profit (Group share), excluding
non-recurring items: Current net profit (Group share)
corresponds to the net profit (Group share) adjusted for other
non-current operating income and expenses, associated tax effects,
profit from discontinued operations and the contribution upon
distribution of the dividend in cash.
Gross operating profit (EBITDA)
This aggregate amount, which is used in particular in the
calculation of certain ratios, is the sum of the current operating
profit, the amortisation expense for intangible and tangible fixed
assets for the period, the expense associated with share option
plans and dividends paid during the period by associates.
Net debt
Net finance costs as defined and used by the Group correspond to
the sum of the long-term financial debt, short-term financial debt
and accrued interest, less cash and cash equivalents.
The regulatory information related to this press release is
available at www.remy-cointreau.com
_________________________
(*) Absolute values and organic growth are calculated at
constant exchange rates and scope.
APPENDICES
Sales and current operating profit by
division
(€ millions) at 31 March 2017 at 31 March 2016
Change Published Organic(*) Published Published
Organic(*) A B C A/C-1
B/C-1
Sales
House of Rémy Martin 707.5 712.6 647.8 +9.2%
+10.0% Liqueurs & Spirits 276.3 277.1 273.9 +0.9% +1.3%
Sub-total Group brands 983.8 989.7 921.8 +6.7% +7.4% Partner Brands
111.0 110.6 129.0 -13.9% -14.2%
Total 1,094.9
1,100.3 1,050.7 +4.2%
+4.7% Current operating profit House of Rémy
Martin 185.2 167.5 139.7 +32.6% +19.9% as % of sales 26.2% 23.5%
21.6% +4.6pts +1.9pts Liqueurs & Spirits 57.5 52.7 48.0 +19.9%
+9.7% as % of sales 20.8% 19.0% 17.5% +3.3pts +1.5pts Sub-total
Group brands 242.7 220.2 187.6 +29.3% +17.3% as % of sales 24.7%
22.2% 20.4% +4.3pts +1.8pts Partner brands 2.0 1.7 6.1 (66.9%)
(72.4%) as % of sales 1.8% 1.5% 4.8%
-3.0pts -3.3pts Holding company costs (18.6)
(18.8) (15.4) +21.1% +21.8%
Total
226.1 203.1 178.4 +26.7% +13.8%
as % of sales 20.7% 18.5%
17.0% +3.7pts +1.5pts
(*) Absolute values and organic growth are calculated at
constant exchange rates and scope.
Summary profit and loss account
(€ millions) at 31 March 2017 at 31 March 2016
Change Published Organic(*) Published Published
Organic(*) A B C A/C-1
B/C-1 Sales 1,094.9 1,100.3 1,050.7 4.2% 4.7% Gross Margin 730.7
711.5 665.8 9.7% 6.9% Gross Margin/Sales 66.7% 64.7% 63.4% +3.3pts
+1.3pts
Current operating profit 226.1 203.1
178.4 26.7% 13.8% Current Operating
Profit/Sales 20.7% 18.5% 17.0%
+3.7pts +1.5pts Other operating income and expenses
(4.8) (4.1) 0.3 - - Operating profit 221.3 199.0 178.7 - -
Financial result (31.9) (25.7) (27.3) - - Income tax (44.5) (40.9)
(44.0) - - Tax rate 23.5% 23.6% 29.1% - - Share in profits of
associates (19.6) (19.6) (4.8) - - Net profit/(loss) from
deconsolidated and discontinued operations 65.0 65.0 - - - Minority
interests 0.0 0.0 (0.1) - - Net profit (Group share) 190.3 177.8
102.4 85.7% 73.5%
Net profit excluding non-recurring items
135.0 122.0 110.4 22.3% 10.5%
Net profit (excluding non-recurring items)/Sales
12.3% 11.1% 10.5% +1.8pts +0.6pt
Earnings Per Share -- Group share (in euros) 3.87 3.62 2.11 83.4% -
Earnings Per Share -- excluding non-recurring items (in euros)
2.75 2.48 2.27 21.1% -
Reconciliation between the net profit and
the net profit excluding non-recurring items
(€ millions) at 31 March 2017 at 31 March 2016
Net
profit (Group share) 190.3 102.4
Provision for impairment on Dynasty Fine Wines Group shares 18.8
3.7 Provision for reorganisation of the distribution network 3.7
2.4 Deferred Tax Liability (France tax rate at 28.9% compared with
34.4%) (14.1) - Net profit/(loss) from deconsolidated and
discontinued operations (65.0) - Other 1.3 1.9
Net profit
excluding non-recurring items 135.0
110.4
(*) Absolute values and organic growth are calculated at
constant exchange rates and scope.
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Rémy CointreauLaetitia Delaye, +33 (0)1 44 13 45 25
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