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 inti.landauro@wsj.com
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