(April 2020 –
March 2021)
Rémy Cointreau emerges stronger from Covid-19
Profitability close to all-time highs Launch of a share buyback
programme Increased confidence in 2030 guidance
Regulatory News:
In the year to end March 2021, Rémy Cointreau (Paris:RCO) posted
sales of €1,010.2 million, up 1.8% on an organic
basis (at constant currency and scope) and down 1.4% on a reported
basis. This performance demonstrates the Group’s resilience
amid the Covid-19 pandemic.
Current Operating Profit came in at €236.1 million, up
9.7% on a reported basis and 12.8% on an organic basis. This
resulted in a current operating margin of 23.4% (up 2.4
percentage points), close to its all-time highs. This performance
was driven by strong growth in the gross margin (up 0.8 percentage
point on an organic basis) and excellent control of overheads (down
2.4 percentage points on an organic basis). The Group was thus able
to increase its communication investment (up 0.9 percentage point)
to support its brands through the recovery.
The margin also includes slightly favourable currency effects
(adding 0.3 percentage point) and a scope effect of -0.2 percentage
point.
Excluding non-recurring items, net profit attributable to the
Group came in at €148.2 million, up 19.4% on a reported
basis.
Key figures
Millions of euros (€m)
To 31/03/21
To 31/03/20
Change
Reported
Reported
Reported
Organic*
Sales
1,010.2
1,024.8
-1.4%
+1.8%
Gross margin
680.1
676.9
+0.5%
+2.9%
GM/sales
67.3%
66.0%
+1.3 pts
+0.8 pts
Current Operating
Profit
236.1
215.1
+9.7%
+12.8%
Current operating
margin
23.4%
21.0%
+2.4 pts
+2.3 pts
Net profit ― Group share
144.5
113.4
+27.5%
+30.2%
Net profit excluding
non-recurring items
148.2
124.2
+19.4%
+20.6%
Net margin excluding
non-recurring items
14.7%
12.1%
+2.6 pts
+2.2 pts
EPS ― Group share (€)
2.89
2.28
+26.8%
-
EPS excluding non-recurring
items (€)
2.96
2.49
+18.7%
-
Net debt/EBITDA ratio
1.33
1.86
-0.53
-
Current Operating Profit by division
Millions of euros (€m)
To 31/03/21
To 31/03/20
Change
Reported
Reported
Reported
Organic*
Cognac
221.0
199.5
+10.7%
+11.3%
As % of sales
30.1%
27.1%
+2.9 pts
+2.0 pts
Liqueurs & Spirits
33.0
37.5
-11.9%
+2.5%
As % of sales
13.3%
14.3%
-1.0 pts
+0.8 pt
Subtotal: Group Brands
254.0
237.0
+7.2%
+9.9%
As % of sales
25.8%
23.8%
+2.1 pts
+1.9 pts
Partner Brands
(0.8)
(1.7)
-
-
As % of sales
-
-
-
-
Holding company costs
(17.1)
(20.1)
-14.9%
-15.9%
Total
236.1
215.1
+9.7%
+12.8%
As % of sales
23.4%
21.0%
+2.4 pts
+2.3 pts
Cognac
Cognac sales were up 3.7%* in financial year 2020/21. This
overall growth was driven by a 9.1% increase in volumes combined
with adverse price/mix effects of -5.4% as a result of very strong
growth in VSOP and intermediaries (CLUB and 1738 Accord Royal).
After a notable decline in the first half of the year, sales
quickened significantly in the second half (up 27.0%*), buoyed by
the United States and mainland China. Although the decline slowed
in the second half of the year, the Duty Free segment and the
on-trade channel continued to weigh on performance in Southeast
Asia, Africa and Latin America.
Current Operating Profit totalled €221.0 million,
up 10.7% on a reported basis (and up 11.3% on an organic basis).
The current operating margin rose 2.9 percentage points to 30.1%,
buoyed by a sharp decline in overhead costs and favourable currency
effects. It also takes account of increased communication
investment, particularly in the key markets of the United States
and China.
Liqueurs & Spirits
Despite a sharp upturn in business in the second half of the
year (+7.2%*), sales of Liqueurs & Spirits declined slightly
over the full year (-3.2%*). The House of Cointreau and the
Whisky business both posted very strong performance, while
the rest of the portfolio was hampered by weakness in the EMEA
region (due to the closure of the on-trade channel) and the Duty
Free segment.
Current Operating Profit came in at €33.0 million,
down 11.9% on a reported basis (+2.5% on an organic basis). The
current operating margin declined 1.0 percentage point to 13.3% due
to a combination of lower volumes and continued strategic
investment, notably to support strong performance by the Cointreau
brand and pave the way for future growth.
Partner Brands
Partner Brands sales declined slightly in the full year
(-1.5%*), with Current Operating Profit coming in at negative
€0.8 million, down from negative €1.7 million in the year to
end March 2020.
Consolidated results
Current Operating Profit came in at €236.1 million, up
9.7% on a reported basis and 12.8% on an organic basis.
Consequently, the current operating margin rose 2.4
percentage points to 23.4% over the full year (+2.3 percentage
points on an organic basis).
This performance was mainly driven by remarkable growth in
Current Operating Profit from Group Brands (+9.9% on an organic
basis), together with lower holding company costs (as a result
of a sharp reduction in travel expenses and the non-recurrence of
costs associated with organisational changes in financial year
2019/20).
Conversely, adverse currency effects reduced Current
Operating Profit by €4.8 million over financial year
2020/21. The EUR/USD exchange rate deteriorated over the period
(averaging 1.17, compared with 1.11 in the year to end March 2020),
while the average collection rate (linked to the Group’s hedging
policy) came out at 1.17, compared with 1.16 in the year to end
March 2020. Scope effects (acquisition of Maisons Brillet
and J. de Telmont) weighed in at € 1.7 million.
Operating profit came in at €235.9 million after
taking into account a net operating expense of €0.2 million (in
respect of acquisition costs over the period).
The Group posted a net financial expense of €14.6
million over the period (a €13.4 million improvement). While
the cost of gross financial debt declined very slightly to €12.0
million (as a result of a reduction in the Group’s average debt),
other finance costs fell €8.5 million as a result of changes in the
terms of some eaux-de-vie supply contracts since the beginning of
the financial year. The Group posted a net foreign exchange loss of
€0.4 million, down significantly from the foreign exchange loss of
€4.7 million posted in the year to end March 2020.
The tax expense totalled €77.6 million, giving an
effective tax rate of 35.1% (33.5% excluding non-recurring items),
lower than the rate for the year ended March 2020 (36.3% on a
reported basis and 33.9% excluding non-recurring items). The lower
tax rate in some countries (notably France and the United States)
was partially offset by an unfavourable geographical mix of
results.
After taking into account the Group’s share of net income from
associates, net profit attributable to the Group came
in at €144.5 million, up 27.5% on a reported basis.
Excluding non-recurring items, net profit attributable to the
Group came in at €148.2 million, up 19.4% on a reported
basis, giving a net margin of 14.7%, up 2.6 percentage
points. Earnings per share (excluding non-recurring items)
came in at €2.96, up 18.7%.
Net debt stood at €314.3 million, down €136.6 million
from the position at end March 2020. This change was mainly driven
by a significant improvement in Free Cash Flow, the disposal of
Passoã SAS and by the fact that the dividend, in respect of
financial year 2019/20, was mainly paid in shares.
The net debt to EBITDA ratio thus came out at
1.33x, down significantly from end March 2020 (1.86x).
The return on capital employed (RoCE) came out at 17.1%
for the year ended 31 March 2021, up 0.6 percentage point year on
year (+1.5 percentage points on an organic basis). Continued
strategic purchases of eaux-de-vie adversely affecting capital
employed were offset by a significant improvement in the
profitability of Group Brands.
On the strength of the significant uplift in its results, the
Group will propose at its Shareholders’ Meeting on 22 July that
an ordinary dividend of €1.85 per share be paid in
respect of financial year 2020/21, a significant increase on
both 2019/20 (€1.00) and 2018/19 (€1.65). The dividend will be paid
entirely in cash.
Implementation of a share buyback programme
At its meeting of 2 June 2021, the Board of Directors of Rémy
Cointreau decided, pursuant to Resolutions 19 and 20 passed at the
Shareholders’ Meeting of 23 July 20201, to authorise the company’s
Chief Executive Officer to implement a share buyback programme.
Pursuant to this authorisation, an investment services provider
will be instructed to purchase up to a maximum of 1 million shares
of Rémy Cointreau SA, accounting for 1.98% of the share capital, at
the price authorised in Resolution 19 passed at the Shareholders’
Meeting of 23 July 2020.
The buyback programme is intended to facilitate the following
transactions, in decreasing order of priority: (1) decrease the
share capital by cancelling treasury shares; (2) meet obligations
arising from free share incentive programmes for employees and/or
corporate officers of the company and/or its affiliates; and (3)
meet obligations arising from securities giving access to the share
capital.
Subject to market conditions2, this buyback programme will
expire no later than 8 December 2021.
2021/22 outlook
In a still fragile and uncertain public health, economic and
geopolitical environment, the Rémy Cointreau Group has emerged
stronger from the Covid-19 crisis.
For financial year 2021/22, the Group is confident in
its ability to continue to win market share in the exceptional
spirits sector. In particular, the Group is anticipating an
excellent start to its financial year, underpinned by very
favourable base effects, shipment phasing effects, and new,
structurally more buoyant consumption trends in the United
States.
Being ahead in the unfolding of its 2030 strategic plan and
given the favourable environment, the Group has decided to
revise up its investments in communication to support its
brands through the recovery and boost their medium-term growth
potential by developing brand awareness and attractiveness.
Expected good growth in Current Operating Profit will also be
tempered by adverse currency effects estimated at between -€16
million and -€20 million and adverse scope effects estimated at
circa -€2 million.
Increased confidence in 2030 guidance
Over the past few months, in a context marked by the pandemic,
Rémy Cointreau has benefited from an acceleration in
pre-existing trends that support the 2030 strategy announced in
June 2020: the rise of mixology and at-home consumption, the
outperformance of high-end spirits, strong growth in online sales
and growing interest in corporate social and environmental
responsibility.
The Group can therefore confidently reiterate its financial and
non-financial guidance: improved portfolio management should enable
it to achieve a gross margin of 72% and a current
operating margin of 33% by 2030 (based on 2019/20 exchange
rates and consolidation scope). At the same time, through its
Sustainable Exception 2025 plan, the Group aims to achieve
sustainable agriculture across all land on which its spirits
depend, as well as reductions in its carbon emissions of 25%
(across Scopes 1 and 2, in absolute terms) and 30%
(across Scope 3, in relative terms) by 2025. This will
be a first step towards achieving the Group’s ambition of “net
zero carbon” by 2050.
Rémy Cointreau reiterates its aim of becoming the global
leader in exceptional spirits, a segment in which the growth
outlook remains attractive, particularly in a world of more
responsible consumption.
APPENDICES
Sales and Current Operating Profit by division
Millions of euros (€m)
To 31/03/21
To 31/03/20
Change
Reported
Organic*
Reported
Reported
Organic*
A
B
C
A/C-1
B/C-1
Sales
Cognac
735.0
762.8
735.5
-0.1%
3.7%
Liqueurs & Spirits
248.3
253.4
261.9
-5.2%
-3.2%
Subtotal: Group Brands
983.3
1,016.2
997.3
-1.4%
1.9%
Partner Brands
26.9
27.1
27.5
-2.1%
-1.5%
Total
1,010.2
1,043.3
1,024.8
-1.4%
1.8%
Current Operating
Profit
Cognac
221.0
222.1
199.5
10.7%
11.3%
As % of sales
30.1%
29.1%
27.1%
+2.9 pts
+2.0 pts
Liqueurs & Spirits
33.0
38.4
37.5
-11.9%
2.5%
As % of sales
13.3%
15.2%
14.3%
-1.0 pts
+0.8 pt
Subtotal: Group Brands
254.0
260.5
237.0
7.2%
9.9%
As % of sales
25.8%
25.6%
23.8%
+2.1 pts
+1.9 pts
Partner Brands
(0.8)
(1.0)
(1.7)
-
-
As % of sales
-
-
-
-
-
Holding company costs
(17.1)
(16.9)
(20.1)
-14.9%
-15.9%
Total
236.1
242.6
215.1
9.7%
12.8%
As % of sales
23.4%
23.3%
21.0%
+2.4 pts
+2.3 pts
Summary income statement
Millions of euros (€m)
To 31/03/21
To 31/03/20
Change
Reported
Organic*
Reported
Reported
Organic*
A
B
C
A/C-1
B/C-1
Sales
1,010.2
1,043.3
1,024.8
-1.4%
1.8%
Gross margin
680.1
696.7
676.9
0.5%
2.9%
GM/Sales
67.3%
66.8%
66.0%
+1.3 pts
+0.8 pt
Current Operating
Profit
236.1
242.6
215.1
9.7%
12.8%
COP as % of sales
23.4%
23.3%
21.0%
+2.4 pts
+2.3 pts
Other operating income and
expenses
(0.2)
(0.2)
(19.7)
-
-
Operating profit
235.9
242.4
195.5
20.7%
24.8%
Net financial income
(expense)
(14.6)
(18.8)
(28.0)
-
-
Corporate income tax
(77.6)
(78.4)
(60.9)
-
-
Tax rate
35.1%
35.1%
36.3%
-1.2 pts
-1.2 pts
Share in profit (loss) of
associates/minority interests
0.9
0.9
0.4
-
-
Net profit after tax from
discontinued operations
0.0
0.0
6.4
-
-
Net profit - Group share
144.5
146.0
113.4
27.5%
30.2%
Net profit excluding
non-recurring items
148.2
149.7
124.2
19.4%
20.6%
Net profit (excluding
non-recurring items)/sales
14.7%
14.3%
12.1%
+2.6 pts
+2.2 pts
Group earnings per share (€)
2.89
2.92
2.28
26.8%
-
Earnings per share excluding
non-recurring items (€)
2.96
2.99
2.49
18.7%
-
Reconciliation between net profit
and net profit excluding non-recurring items
Millions of euros (€m)
To 31/03/21
To 31/03/20
Net profit attributable to the
Group
144.5
113.4
Westland’s partial goodwill write-off
-
18.8
Non-recurring tax items
3.5
(2.5)
Net profit after tax from discontinued
operations
-
(6.4)
Other
0.2
0.9
Net profit excluding non-recurring
items attributable to the Group
148.2
124.2
Definitions of alternative performance
indicators
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 across both financial years, which local
management is more directly capable of influencing.
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:
- Current Operating Profit consists of
operating profit before other non-recurring operating income and
expenses. - Net profit attributable to the Group excluding
non-recurring items consists of net profit attributable to the
Group adjusted to exclude other non-recurring operating income and
expenses, associated tax effects, profit from deconsolidated,
divested and discontinued operations and the contribution from
dividends paid in cash.
Gross operating profit (EBITDA) This measure, which is
used in particular to calculate certain ratios, equates to Current
Operating Profit less amortisation 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.
Regulated information in connection with this press release can
be found at www.remy-cointreau.com.
1 See section 7.1.4 of the 2019/20 Universal Registration
Document 2 The implementation of these buybacks, their
duration, and the final amounts thus repurchased will depend in
particular on market conditions. Rémy Cointreau reserves the right
to change all or part of the terms of these buybacks, within the
limits indicated above
(*) Organic growth is calculated assuming constant exchange
rates and consolidation scope.
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