Research that is free to access for all investors. Companies commission these providers to write research about them.
Brokers who write research on their corporate clients and make it available through our main bundle offering.
Research that is paid for directly by asset managers. Only accessible to institutional investors permissioned for access.
Event in Progress:
View the latest research on other companies in the sector.
Summary of Q326 sales Remy Cointreau Q326 LFL sales grew +2.8% which was c.+120bp ahead of consensus expectations, with the modest beat driven by Remy Martin which grew LFL sales +3.2% (co. cons. +1.3%). The unfavourable timing of Chinese New Year had a c.-3%-pt impact on group LFL sales (c.-8%-pt impact on Apac). US Q3 value depletions declined low-to-mid single digits (Q2 -MSD). China 9M value depletions declined by high-teens including the negative CNY calendar effect. News We highlight that while Remy Cointreau US value depletions improved sequentially in Q3, the speed and magnitude of the improvement was a bit below expectation due to larger than expected market decline. Earnings We revise our FY26e/ FY27e/ FY28e EPS by +4% / -11% / -11%. The material downward revision to our FY27-28e estimates is primarily driven by revised FX which in turn reflects both recent moves and our forecasts for transactional FX. Investment thesis While we view a more volume driven focus at Remy Cointreau as a sensible shift in strategy, visibility on achievement of this volume improvement without material margin erosion is low. Rating and target price We maintain our Neutral rating. We revise our target price to EUR36 (from EUR38). 15 questions for management Do you expect larger than normal US tax refunds to trigger a near-term rebound in Cognac demand (akin to the influence of stimulus checks during Covid)?
Remy Cointreau Remy Cointreau SA
BNPP View While there were regular caveats added, our overall sense is that Remy Cointreau sees reasons for some modest relative optimism in China going into the CNY selling period. Combining this with the positive press articles on China Baijiu overnight, we are not surprised to see the shares up meaningfully today. This said, we also noted comment that the magnitude of improvement in the US depletion trend was less than expected (due to market pressures) and comments on hedge rates point to potentially meaningful transactional FX driven downgrades to consensus EBIT unless there is a rebound of the USD / CNY (vs. EUR). Points of colour below: Highlights: QandA . US: Remy Cointreau is on the right track in the US but the magnitude of the improvement is less than expected because the market is declining in a bigger way than expected. Globally, Remy Cointreau is performing better than competition. Wrt. the US Nielsen data strength in the US in January, retail stocks are being depleted at points of sale so there is a touch of relative optimism. . China: Remy Cointreau is relatively optimistic on CNY, it will not be the CNY campaign of the century and have a wait-and-see attitude like the market. But so far so good and not excessively optimistic nor pessimistic. Overall, relatively optimistic. . China New Year: All channels in China in Q3 were negative and so global confidence is lower than one year ago. 1/3 of sales in China is direct so Remy Cointreau is well-positioned to profit in a recovery. . FX for FY27: So far coverage of net FX needs: covered 65-70% on USD at 1.16 with 60% options. This year landing at 1.12-1.13 so there will be a negative hedging impact. 34% of FX is now CNY and 60% hedged at 8.40 with 70% options. This year average weight will be between 8.00-8.10. . US price / mix: price adjustment to USD49.99 on VSOP in most states. And the GM on XO is a very strong element for everybody in the industry. Next year, too early to say if...
BNPP View Q3 LFL sales are a modest beat and FY guidance remains unchanged. More importantly, while US Cognac value depletions remain negative the overall Americas trend has improved sequentially and Remy Cointreau''s competitive performance in China continues to appear to be relatively strong (Q3 China Cognac LFL sales almost stable ex. CNY timing). Overall, to our minds a directionally positive update. Combined with the positive local media reports in China around Baijiu, we expect a positive share price reaction (size is difficult to call, maybe around +MSD). Q326: Headline metrics . Group LFL: +2.8% (co. cons. +1.6%) . Group sales: EUR245.8m (+1.3% vs. co. cons.) . Remy Martin LFL: +3.2% (co. cons. +1.3%) . Liqueurs and Spirits LFL: +2.8% (co. cons. +3.0%) Top-line drivers Scanning the top-line drovers by division, the Q326 group LFL sales beat (+2.8% vs. co. cons. +1.6%) was driven by Cognac (+3.2% vs. co. cons. +1.3%), led by growth in the Americas on a favourable comparison base, while sales in the Liqueurs and Spirits division came in broadly in-line with consensus expectation (+2.8% vs. co. cons. +3.0%). The unfavourable timing of CNY had a c.-3%-pt impact on group LFL sales in Q3 (-8%-pt at the APAC level). Bottom-line drivers N/A - only a sales update. Other . Value depletions: 9M US value depletions declined -MSD with Q3 at -LSD to -MSD (cf. Q2 -MSD). 9M value depletions declined -high-teens in China, including some negative calendar effects in Q3 (cf. -mid-teens in H1). 9M value depletions declined -MSD in EMEA (cf. H1 -MSD). . China Cognac: Mainland China LFL sales declined by -low DD% in Q3, affected by continued complex market conditions and unfavourable CNY timing. Q3 LFL sales would have been almost stable ex. the CNY timing impact helped by a strong performance during D11 Festival on e-commerce and return to normal trading conditions in Travel Retail. . US Cognac: Remy Martin US volume depletions declined -7.9% in Q326 (cf. Q226...
What happened? We recently caught up with Remy Cointreau to get a summary of what it has been saying to investors over recent weeks (Remy Cointreau reports Q326 sales on the 29 January). There was no change to Remy Contreau''s FY26 guidance. BNPP View: Overall, we felt the tone from the company was on the constructive side, but we would be surprised to see much revision to consensus group LFL sales expectation for Q326 (+1.5%) and for the FY26 (+0.6%). . China: While the market context remains tough, Remy Cointreau performance has been decent in this context with the caveat that wholesaler order for the key CNY period have not yet started. Overall, our sense was that APAC organic sales may be in slight LFL decline in Q3 due to the c.-EUR8m phasing impact from CNY timing. While anti-corruption measures remain in place, the intensity of them has reduced in some areas over recent weeks. . US / EMEA: Oct/Nov depletions trends in the US saw outperformance from the higher-end part of the portfolio. Our sense was that US and EMEA organic sales growth in Q3 are likely to be broadly in-line with the group overall (+LSD territory).
Summary of H126 results Remy Cointreau H1 LFL COP declined -13.6% (co. cons. -17.4%) which drove a c.+4% H1 EBIT beat. While margins at both divisions were ahead of consensus expectations, the beat was primarily driven by Liqueurs and Spirits (H1 LFL EBIT +9.9% vs. co. cons. -0.4%). H1 group EBIT margin declined -270bp on an LFL basis (-540bp reported including a -270bp impact from FX) made up of: GM -240bp (tariffs -90bp); AandP -90bp and Distribution and other +60bp. H1 net profit was c.+10% ahead of co. cons. expectation. All elements of Remy Cointreau''s FY26 outlook remain unchanged and the company expects to give more details of its mid-term roadmap with H127 results in November 2026. News We highlight that while Remy Cointreau will stay true to its value-oriented strategy, growing volumes, including in the US, is the no.1 priority for the new CEO. Earnings We revise our FY26e/ FY27e/ FY28e EPS by +1% / -2% / -5%. Investment thesis While we view a more volume driven focus at Remy Cointreau as a sensible shift in strategy, visibility on achievement of this volume improvement without material margin erosion is low. Rating and target price We maintain our Neutral rating. We revise our target price to EUR39 (from EUR40). 15 questions for management Have you observed any improvement in the underlying consumer demand context for spirits / Cognac in China in recent weeks?
BNPP Exane view The main point of note from the conference call for us was that the new CEO has set out a clear view that the Remy Cointreau''s strategy will shift more towards volume and take pragmatic rather than dogmatic approach towards pricing in the current context. In our view the shift to focus on improving volume growth to reduce the large inventory balance is a sensible one but it is 1) not clear how easy this will be to do; 2) as commented on by Remy Cointreau itself it will likely lead to some natural GM erosion compared to the strategy of old and we suspect many are still (like us) forecasting very strong mid-term EBIT margin expansion which is arguably less likely with lower top-line contribution from mix / pricing vs. volume. This may become more concrete when the new CEO presents details of the new mid-term roadmap although this will not be until November 2026. Highlights: QandA . Quick wins: means being opportunistic, in a crisis there are always opportunities. This can be via more AandP (e.g. drove improvement in MAF); pricing activities in the trade; depletion incentives and promotional activities. . Balance sheet: the group has a lot of weapons from a balance sheet perspective. The issue is more the EBITDA trend. Over the long-term need to think more about cash flow than the PandL. . Sell-out trends in China: some of the quick wins was to re-invest AandP with measured ROI. Glad did that because CLUB was only Cognac in growth during MAF. . Pricing strategy in the US: we are in a crisis and #1 objective is to grow the top-line that is profitable and need volume. Growing the volume is the top priority including in the US. . Recent sales trends: in last 2-3 months the sales trajectory has been improving but still negative. In October China was very positive (with some calendar effect) but the indirect part of the business remains volatile. In the US, the trend is improving constantly. EMEA depletions are still negative so far but are...
BNPP Exane View H1 profits are materially ahead of consensus expectations (primarily driven by the LandS division) and the FY outlook is unchanged. We also note that in China, Remy Cointreau comments on a ''positive outcome'' for MAF which ''has finally taken off''. From a strategy perspective, from our initial read of the presentation slides it appears Remy Cointreau will take a more pragmatic approach to pricing / mix (a focus on immediate value creation) and may look to sell some of its tail of brands. Given the very material decline in the shares over the past month and the stock being heavy shorted, we think this will be good enough for a materially positive share price reaction today (at least +5% and could be much more). H126: Headline metrics . Group LFL COP: -13.6% (co. cons: -17.4%) . Group COP: EUR108.7m (+3.8% vs. co. cons.) . Net profit adj.: EUR63.2m (+9.9% vs. co. cons.) . Recurring EPS (basic): EUR1.22 (no. co. cons. available) Top-line drivers H126 organic sales decline of -4.2% (already reported on 30th October), with Cognac LFL sales -7.6% and LandS +4.1%. Bottom-line drivers H126 group current operating margin was 22.2% (co. cons. 21.3%) -540bp YOY (-270bp organically). The H1 organic COP margin contraction reflects: gross margin -240bp; AandP -90bp and Distribution / other +60bps. FX had an impact on H1 EBIT of -EUR18.7m (co. cons at -EUR15.7m). From a divisional perspective, Cognac division LFL COP declined by -18.3% (co. cons. -20.2%), offset by the LandS division which grew LFL COP by +9.9% (co. cons. -0.4%). Other metrics . Net debt: EUR686.7m (co. cons. EUR731m) . FCF: -EUR-16.5m . US Cognac depletions: -4.3% in Q1; -1.7% in Q2 and -1.4% in Oct-25. . China: Complex MAF execution, with a positive outcome. MAF has ''finally taken off'' with Remy Cointreau adopting greater pricing agility to adapt to new market dynamics, stronger execution and a relevant product offer. . Strategy: stick to value strategy but revisit mix and pricing. Will...
Summary of Q226 sales Q2 LFL sales declined by -11.0%, -150bps below company consensus, with the miss primarily driven by Liqueurs and Spirits (-5.3% vs. co. cons. -1.9%) while Cognac also came in slightly below consensus expectations (-13.5% vs. co. cons. -13.0%). Driven by the deterioration of market conditions in China and weaker-than-expected sales rebound in the US, Remy Cointreau revised its FY26 guidance and now expects LFL sales growth in the range of stable to +low-single digit (previously +MSD%) and an organic % COP decline between low double-digit to mid-teens (previously -MSD%). News We highlight that for H226, Remy Cointreau expect flat to slightly positive LFL sales for Q326, improving to double digit growth in Q426, supported by easier comps. Earnings We revise our FY26e/ FY27e/ FY28e EPS by c.-17% / c.-16% / c.-15%. Investment thesis While LFL sales may soon benefit from lapping destock comps. in the US, longer-term concerns for the Cognac category persist. Rating and target price We maintain our Neutral rating. We revise our target price to EUR40 from EUR45. 15 questions for management To what extent do your tariff mitigations in FY26 simply reflect in-house pre-stocking ahead of tariffs and to what extent do they reflect mitigations that will last into FY27?
BNPP Exane view A cautious tone from Remy Cointreau in light of the negative revision to FY25/26 guidance announced this morning. Key incremental points from the call include i) on mid-Autumn Festival, Remy commented on underlying value depletions being flat to slightly positive, driven by mid-to-high single digit positive volume depletions, ii) on the implied H2 performance embedded within the guidance, Remy expects flat to slightly positive LFL sales in Q3 (BBG cons. +8.6%) and a +DD% increase in Q4 (BBG cons. +11.2%). With the exception of these points, there was little share price sensitive commentary during the call. Points of colour below: Highlights: QandA . Updated outlook: The updated sales/EBIT guidance has been led by the slower than expected trajectory in several markets. On the lower sales guidance, China saw a worse Q2 performance than Remy was expecting at the end of July. Second is the US, even though it is growing, but depletions are still negative with slightly negative mix. In H2, if you don''t have solid depletions, any potential recovery is more fragile. So in the US, still need to better align depletions with sell-in. Thirdly, in EMEA, while it is a less important impact, it is still trending negatively. Then on EBIT, the declining top-line would mechanically lead to low DD% to mid-teens LFL EBIT for the year. On gross margin, they are seeing a more promotional environment in China which is a gross margin headwind. Moreover, the cost of doing business in China is now higher than in previous years. On overheads, don''t have any more significant potential cuts available following the savings made in recent years. . China normalised performance: Overall, MAF was soft on a market level. Are now operating in a more complicated environment in China. Looking specifically at the MAF performance, are seeing mid to high single digit volume depletions (driven by Club), with flat to slightly positive value depletions. But this is clearly...
BNPP Exane View Driven by deterioration of market conditions in China and weaker-than-expected rebound in sales in the US, Remy Cointreau has trimmed its FY26 organic sales outlook. However, the implied cuts to consensus profits are much more material (we estimate c.-17-18% cuts to consensus FY26 EBIT) as the company aims to maintain investment levels to support recovery. The only modest positive to our minds is that US Cognac value depletions continue to sequential improve. While we think there was some expectation of a reduction to the FY26 guide today, the implied cuts to consensus profits are very material. We expect a meaningfully negative share price reaction of around high-single digits. Q226: Headline metrics . Group LFL: -11.0% (co. cons: -9.5%) . Group sales: EUR268.8m (-0.9% vs. co. cons.) . Remy Martin LFL: -13.5% (co. cons: -13.0%) . Liqueurs and Spirits LFL: -5.3% (co. cons: -1.9%) Top-line drivers Scanning the top-line trends by division, the Q226 organic sales miss (-11.0% vs. co. cons. -9.5%) was driven primarily by the Liqueurs and Spirits division (-5.3% vs. co. cons. -1.9%) while the Cognac division also came in slightly lower than expectations (-13.5% vs. co. cons. -13.0%). Bottom-line drivers N/A - only a sales update. Other . Group H1 LFL: vols +2.4%, price / mix -6.6%; LFL sales -4.2%; . Cognac H1 LFL: vols +0.7%, price / mix -8.4%; LFL sales -7.6%; . LandS H1 LFL: vols +5.2%, price / mix -1.0%; LFL sales +4.1%; . H1 value depletions: US -MSD% to HSD% in H1, -MSD in Q2 (Q1 -HSD); China down mid-teens in H1 (Q1 +HSD%); EMEA down MSD% (Q1 -HSD%). . US Cognac: Remy Martin US volume depletions declined -3.5% in Q226 (cf. Q126 -8.5%, Q425 -2.3%, Q325 -11.5%, Q225 -11.9%) and were below Q220 by -44.7% (cf. Q1 -33.5%, Q4 -38.9%, Q3 -34.3%, Q2 -42.8%). Value depletions declined by MSD to HSD% Q2 (cf. Q1 -low DD, Q4 -HSD) with volumes down low to MSD%, mostly driven by VSOP improvement. . US wholesaler inventories: Close to 4 months...
We have adjusted our estimates to reflect lowered fiscal Q2 / FY26 organic sales and EBIT growth primarily driven by our expectations of growth in China. We do not consider the changes to be material; our rating is unchanged.
What happened? We recently caught up with Remy Cointreau to get a summary of what it has been saying to investors over recent weeks (Remy Cointreau reports Q325 sales on the 30th October). Overall, we felt the tone from the company was on the cautious side with respect to Q2 LFL sales growth driven by headwinds in China and we would not be surprised if consensus'' organic sales decline shifts towards expectation of a high-single digit to low-double-digit decline for Q2 (cf. BBG cons. -5.8%). There was no change to Remy Contreau''s FY26 guidance. Points of colour: . China: The underlying market in China remains tough (in-line with recent comments from peers) with demand negatively impacted by restrictions on alcohol consumption by government officials. Q2 will also face a number of technical headwinds including: continued negative impact on Cognac in China duty-free (which is officially re-opened but the administrative process is not smooth); calendar effects from the later timing of Mid-Autumn Festival (3 weeks later); and some pull-forward of sell-in in Q1 ahead of the end of the anti-dumping investigation. Overall, our sense is that Apac Q2 LFL (driven by China) could see a strong double-digit sales decline in Q2. . US: The volume depletion and sell-out trends for Remy Martin in the US are seeing sequential improvement month after month. The transition in wholesaler in California has generally been smooth (albeit with California underperforming the wider US business in recent months). We suspect overall Americas LFL sales in Q2 will be in modest positive territory primarily driven by easy sell-in comps. . EMEA: We did not get the sense that Q2 trends in EMEA have changed materially vs. Q1. . Profit phasing: Gross margin in H1 will face headwinds from a combination of US tariff impact and negative mix (Cognac underperforming LandS; high-end brands underperforming; and China sell-in underperforming the rest of the group).
Summary of Q126 sales Q1 LFL sales grew +5.7% which was +330bp ahead of company consensus. The beat was driven primarily by the Liqueurs and Spirits division (+17.3% vs. co. cons. 6.0%) where North America sell-in grew by very strong double-digits on very low comps. Remy Cointreau estimates its overall group value depletions declined -2.2% in Q1, including a low double-digit decline in US Cognac (cf. -HSD in Q4) partially offset by +HSD growth in China Cognac. News We highlight that Q1 LFL sales growth was impacted by disruption to the China Duty Free channel and a distributor change in California which each negatively impacted group growth by c.-2.5%-pts. Earnings We revise our FY26e/ FY27e/ FY28e EPS by c.+14% / c.+20% / c.+17% primarily driven by removal of the estimated impact from US tariff impacts (on the EU) which reflects our view that the most probable outcome of US/EU tariff negotiations will include a waiver from additional duties for spirits. Investment thesis While LFL sales may soon benefit from lapping destock comps. in the US, longer-term concerns for the Cognac category persist. Rating and target price We maintain our Neutral rating. We revise our target price to EUR54 from EUR42. 15 questions for management What gives you confidence that your US value depletion growth will materially accelerate in the balance of FY26 from the high-single digit decline in Q1?
BNPP Exane View Remy Cointreau''s FY26 outlook ex. all tariffs remains unchanged. As to the outlook on tariffs, the reduced impact in China from the minimum price commitment (vs. tariff scenario) is broadly as we expected. If one assumes that tariffs are waived between the US/EU (which appears the most likely scenario to us at present) we estimate consensus EBIT estimates will be subject to c.+12% upgrades for FY26e and closer to c.+15% for FY27e. The underlying substance of today''s update (i.e. latest value depletions trends) is mixed with China surprisingly strong but US Cognac value depletions deteriorating sequentially. Tough to call the shares today, while tariff relief driven upgrades should arguably not be a surprise, given the quantum of the potential uplift in what we view as the most probably scenario, on balance we expect a modest positive share price reaction today. Q126: Headline metrics . Group LFL: +5.7% (co. cons: +2.4%) . Group sales: EUR220.8m (+3.2% vs. co. cons.) . Remy Martin LFL: +1.3% (co. cons: +0.9%) . Liqueurs and Spirits LFL: +17.3% (co. cons: +6.0%) Top-line drivers Scanning the top-line trends by division, the Q126 organic sales beat was driven by the Liqueurs and Spirits division (+17.3% vs. co. cons. +6.0%) where North America LFL sales grew v. strong DD driven by a very low base of comparison. Bottom-line drivers N/A - only a sales update. Other . China DF: disruptions to Travel Retail in China had a c.-2.5%-pt impact on group sales (-EUR5.5m). . Group LFL: vols +12.4%, price / mix -6.6%; . Cognac LFL: vols +9.4%, price / mix -8.1%; . LandS LFL: vols +16.8%, price / mix +0.5%; . Value depletions: US down -HSD; China down +HSD% including + strong DD% in mainland China; EMEA -HSD. . US Cognac: Remy Martin US volume depletions declined -8.5% in Q126 (cf. Q4 -2.3%, Q3 -11.5%, Q2 -11.9%, Q1 -32.3%) and were below Q420 by -33.5% (cf. Q4 -38.9%, Q3 -34.3%, Q2 -42.8%, Q1 -27.4%). Value depletions declined by low DD in Q1 (cf....
What happened? We recently caught up with Remy Cointreau ahead of its closed period (it reports Q126 sales on 25th July) to get an update on what the company has been saying to investors over recent weeks. Remy Cointreau''s outlook remains unchanged. BNPP Exane View: Overall, we felt that the tone from Remy Cointreau remained cautious but was slightly more positive in terms of recent trends in the US and China, as well as the announcement last week from MOFCOM on minimum price agreements for Chinese Cognac imports. On the quarter, our sense is that risk to BBG consensus Q126 LFL sales (+0.7%) could lie very modestly to the upside, led by slight sell-in growth in Cognac (supported by softer sell-in comps in the US) and stronger growth trends in the LandS division. Remy Cointreau''s FY26 guidance remains unchanged. Additional points of colour below: US: As flagged at the FY25 results, Remy Cointreau noted that it expects a strong technical rebound in US sell-in trends in Q126 on very soft comps. On underlying depletions in the US, Remy noted that it has seen a slight sequential improvement in depletions for the total US business in Q1 (although do not have the full June picture), while on Cognac specifically trends are more volatile - with tougher trends in April, better in May and slightly better still per the early June data. Although still not into positive Cognac depletions in the US. APAC: Remy Cointreau commented that it would expect modest declining trends in APAC, as while the market continues to be challenging in China, Remy is relatively resilient versus competitors. Moreover, this still includes the negative impact from China duty free - noting that China ex. Duty free could have been in growth in the quarter. Remy also noted that in FY23/24, China duty free accounted for c.EUR25-30m of net sales for Remy Cointreau (c.2% of group net sales). EMEA: The company noted a slow start to the year in EMEA, mostly driven by the Cognac division. As...
Summary of FY25 results FY25 organic sales declined -18.0% (as reported on 30th April). Remy Cointreau organic COP declined -30.5% in FY25 (co. cons. -31.7%) reflecting a -32.5% decline in the Cognac division and -10.5% decline in Liqueurs and Spirits. Adjusted net profit was c.+3.5% ahead of co. cons. expectation, and Remy Cointreau announced an ordinary dividend of EUR1.50. In FY26, Remy Cointreau expects organic COP growth between +HSD and +low-DD excluding tariffs but a decline in the mid-to-high teens range in a worst-case scenario (tariffs in both China and the US). News We highlight that if FY26 sales growth is in-line with Remy Cointreau''s budget scenario, it believes it would be able to offset more than 35% of the potential tariff impacts in the US and China (up to a level of 50-65%). Earnings We revise our FY25e/ FY26e/ FY27e EPS by c.-3% / c.-11% / c.-10%. Investment thesis While LFL sales may soon benefit from lapping destock comps. in the US, longer-term concerns for Cognac in both the US and China persist. Rating and target price We maintain our Neutral rating. Our target price remains unchanged at EUR42. 15 questions for management Roughly what level of sell-out growth for Remy Martin in the US does your expectation of mid-single digit FY26 group organic growth embed?
BNPP Exane view A detailed call from Remy Cointreau, but for us key takeaways are i) Remy noted that the net tariff impact of EUR65m on COP, reflecting 35% mitigation actions, was a worst case scenario, and that there could be additional actions that could be taken to reduce that net impact - noting that if top-line trends accelerate in-line with Remy''s expectations in FY26, they would be able to offset 2/3 of the gross tariff impact (rather than just 35%), ii) Remy noted that it is still waiting for the spark in US cognac and is too early to say that sell-out trends are back to flat/positive territory, and iii) Remy commented that it is happy with stock levels worldwide which are now pretty healthy. As to the shares (now up c.+4%), we suspect that this could be in reaction to more positive comments on tariff impacts and mitigation efforts from the company. Highlights: QandA . US depletions vs. sell-out: Depletions are around mid-single digit negative. Looking at VSOP, they are close to flat depletions, showing the impact of the actions on pricing. Remy still see room for further pricing actions on the smaller formats, so still expect some impact there. It is too early to say that the better trends are driven truly by sell-out, think that the decisions on price will have had a positive short term impact. So they are still waiting for the spark, but it is still too early to say that sell-out is back to flat. But note that they are happy with their stocks which are now pretty healthy. Sell-out will take a bit more time and is hard to say when it will happen, but believe that a good share of what is happening is cyclical. . Tariff sensitivity: In theory, a 10% higher tariff on the EU has a EUR20m gross impact on Remy EBIT, but this is not necessarily the case in reality given that there are a lot of moving parts. Working to get to a flat to LSD% increase in overheads. If the top-line assumptions are there, they could in theory increase mitigation...
BNPP Exane View While FY25 results are modestly ahead of expectations this is of relatively little importance. We estimate Remy Cointreau''s FY26 financial objectives including the impact of tariffs in both China and the US (net of mitigating actions) would point to a c.-19% cut to co. consensus COP. However, tariff risk is likely more fully reflected in the shares than it is in the sell-side consensus. Nevertheless, we suspect the c.EUR65m potential net impact from tariffs pointed to by the company (equivalent to c.30% of FY25 EBIT) is likely bigger than most expected. On this basis, while the shares are tough to call, we expect a negative share price reaction today (around mid-single digits). We also note that the FY30 margin targets have been withdrawn but this likely comes as little surprise. FY25: Headline metrics . Group LFL COP: -30.5% (co. cons: -31.7%) . Group COP: EUR217.0m (+1.4% vs. co. cons.) . Net profit adj.: EUR128.0m (+3.5% vs. co. cons.) . Recurring EPS (basic): EUR2.49 (+3.8% vs. co. cons.) . DPS: EUR1.50 (bbg. cons. EUR1.58), of which EUR1.0 is in cash and EUR0.5 with the option for payment in cash or in shares. Top-line drivers FY25 organic sales decline of -18.0% (already reported on 30th April). Bottom-line drivers FY25 group current operating margin was 22.0% (co. cons. 21.7%) -350bp YOY (-390bp organically). The FY organic COP margin contraction reflects: gross margin -100bp; AandP +110bp and Distribution / other -400bps. FX had a positive impact on FY EBIT of +EUR5.6m (co cons at +EUR5.3m). From a divisional perspective, Cognac division LFL COP declined by -32.4% (co. cons. -32.4%) and LandS division LFL COP declined by -10.5% (co. cons. -15.8%). Other metrics . Net debt: EUR675.4m (co. cons. EUR671m); net debt/EBITDA ratio was 2.40x. . Underlying tax rate: 27.2% (co. cons. 27.4%) . Cost savings: Delivered EUR85m of cost savings in FY25 compared to an expected EUR50m. Remy have now delivered EUR230m of total cost savings on a...
What happened? This morning Remy Cointreau announced the appointment of its new CEO, Franck Marilly, who will take office on 25th June 2025, succeeding the current CEO Eric Vallat, who announced his resignation on 9th April. Mr Marilly has over 30 years of experience with the luxury and cosmetics industry, most recently serving as CEO of the EMEA region and the global fragrance division of Shiseido, which he joined in 2018. Prior to this, Mr Marilly spent 17 years at Chanel, where he notably served as CEO of the EMEA region for the fragrance and beauty division. Prior to joining Chanel, Mr Marilly held various positions including President of the fragrance division for Unilever in France. Importantly, we note that Mr Marilly was appointed Foreign Trade Advisor of France in February 2025 by a decree signed by the Prime Minister. BNPP Exane View: Mr Marilly joins as CEO at a challenging time. But interestingly, despite over 30 years working in fragrance and luxury, we note that he joins the with little to no experience of working within the spirits/beverages sector. However, in our view, an important motivation for the appointment is likely Mr Marilly''s role as the Foreign Trade Advisor of France, particularly given the current tariff uncertainty impacting Remy Cointreau.
Summary of FY25 sales Remy Cointreau FY25 group LFL sales declined -18.0% (Q4 -19.0%), broadly in-line with consensus expectations. US Cognac value depletions declined HSD in Q4 (volume depletions 2.3%) improving from a mid-teens decline in Q3. Excluding calendar effects, China Cognac value depletions declined by HSD in Q4 as trends reversed and turned sharply negative from mid-February onward in a harsher environment. LandS division FY25 LFL sales declined -9.6% (Q4 +16.1%). News We highlight that Remy Cointreau expects double-digit LFL sales growth in the US in FY26. Earnings We revise our FY25e/ FY26e/ FY27e EPS by c.-2% / c.-5% / c.-3%. Investment thesis While LFL sales may soon benefit from lapping destock comps. in the US, longer-term concerns for Cognac in both the US and China persist. Rating and target price We maintain our Neutral rating. Our target price moves from EUR41 to EUR42. 15 questions for management Did you observe a sequential improvement in the estimated sell-out demand for your overall US Cognac business in recent months?
BNPP Exane view The focus of the call was on the likely development of FY26. In the context of lots of potential swing factors, many different scenarios were discussed but we would draw out the following points: 1) Remy Cointreau is not concerned by consensus expectation for +MSD LFL sales growth in FY26, under-pinning this it expects double-digit US LFL sales growth driven by re-stocking on very low comps.; 2) organic COP margin would be slightly negative if there is only a tariff in US and not China; 3) assumption of an EUR/USD spot rate of 1.15 would lead to a hedge rate of 1.12 leading to an -EUR10-15m impact on FY26 COP. Overall, while we can rationalise the positive share price reaction in-light of the sequential improvement in the US Cognac depletion trend, we struggle to view the update today as meaningfully positive. Highlights: QandA . China depletions: from mid-Feb the environment turned down into a more harsh one. This was more linked to a lack of confidence from wholesalers and cautious behaviour indirectly related to the trade war and not a shift in consumers. Looking at the channels, see strength in e-commerce (+10% depletions in Q4). It was more related to a freezing of purchases by wholesalers and even more of a wait and see attitude. . FY26: will be more precise on the FY26 outlook in June (with FY25 results). For top-line, so far Visible Alpha has +4.6%, it is early but can say this is consistent with mid-term guidance. Nothing more to add at this stage, the consensus is not scaring the company, seems like a good approximation. There are many moving parts for next year: in China the macro impact on confidence is important; the US newsflow in a volatile environment. For bottom-line, in normal circumstance do not expect improvement in COP margin in FY26 because could not fully offset tariff impact from China and US in 1 year. Will provide expected gross / net impact in June but offset will also include growth in sales (driven by...
BNPP Exane View All elements of the organic outlook remain unchanged (for FY25, FY26 and the FY30 margin targets). From a depletions perspective the update is mixed. On the positive side, US Cognac value depletions have sequentially improved (-HSD in Q4 from -mid-teens in Q3) and US wholesaler inventors are now close to 4 months. On the negative side China Cognac value depletions appear to have significantly weakened from mid-Feb driving a -HSD decline (ex. calendar effects) in Q4. As to the shares, we find them very tough to call, we expect a broadly neutral reaction. Q425: Headline metrics . Group LFL: -19.0% (co. cons: -18.2%) . Group sales: EUR196.8m (in-line vs. co. cons.) . Remy Martin LFL: -32.8% (co. cons: -30.6%) . Liqueurs and Spirits LFL: +16.1% (co. cons: +11.6%) Top-line drivers Scanning the top-line trends by division, the modest Q425 organic sales miss was driven by Cognac (-32.8% vs. co. cons. -30.6%), led by a steep decline in China offsetting sales growth in the us, partially offset by better-than-expected growth from the Liqueurs and Spirits division (+16.1% vs. co. cons. +11.6%), supported by strong growth in the US. Bottom-line drivers N/A - only a sales update. Other metrics . FY25 Group LFL: vols -11.8%, price / mix -6.3%; . FY25 Cognac LFL: vols -15.6%, price / mix -6.3%; . FY25 LandS LFL: vols -9.0%, price / mix -0.6%; . FY25 value depletions: US down mid-teens YoY (vols -HSD%); China down c.-10% vs. flat at the end of Dec following significant growth depletions in December for CNY (amplified by calendar effect), trends reversed sharply from mid-February onwards; EMEA down HSD%. . US Cognac: Remy Martin US volume depletions declined -2.3% in Q4 (cf. Q3 -11.5%, Q2 -11.9%, Q1 -32.3%) and were below Q420 by -38.9% (cf. Q3 -34.3%, Q2 -42.8%, Q1 -27.4%). Value depletions declined by -HSD in Q4 (cf. -mid-teens in Q3), narrowing the gap with peers (VSOP flat vols). Control states outperformed while open states were more volatile with...
What happened? Remy Cointreau has announced that Eric Vallat has resigned from his position as CEO, effective this summer. After more than 5 years as CEO of the group, Mr. Vallat has decided to dedicate himself to a new professional project. A selection process for the new CEO is underway and Chairwoman, Marie-Amelie de Leusse, will oversee the transition period. BNPP Exane View: While operational results over the past couple of years at Remy Cointreau have been disappointing and characterised by multiple profit warnings, we believe most investors attribute this more to a very tough demand context for the cognac category in both the US and China, than to mismanagement. It is true that Remy Cointreau misjudged the extent to which the US spirits / Cognac demand boom in the early part of Covid was structural (and therefore pushed too hard on pricing / premiumisation) but this was arguably also true of most of the wider industry in our view, and the company has been materially outperforming in China. With this in mind, we view the departure of Mr. Vallat at a time of very significant uncertainty for the company (tariffs in both the US and China loom) as a negative. We also suspect that the FY29/FY30 margin targets (c.33% EBIT margin, c.72% gross margin both at FY19/20 scope and FX) set by Mr. Vallat will be dropped, however we believe these were already viewed as being unachievable by most investors. Overall, we would not be surprised to see some modest relative share price weakness tomorrow.
What happened? We recently caught up with Remy Cointreau to get an update on what it has been saying to investors over recent weeks (Remy Cointreau reports FY25 sales on 30 April). Remy Cointreau''s outlook remains unchanged. BNPP Exane View: Overall, we felt the tone of the call was very modestly positive, in particular with respect the development of the VSOP Cognac depletions in the US. We would not expect any shift in the consensus FY25e organic growth estimate (BBG cons. -17.7%). Points of colour below: Shape of Q4: as previously shared with the Q3 sales update, Remy Cointreau expects to see strong +DD organic growth in the Americas in Q4 (mainly driven by the LandS division but also Cognac) primarily as a consequence of soft comps. In APAC, organic sales is expected to see a sharp DD decline due to very high comps (massive sell-in in Q424) and calendar timing effects. In EMEA, Q4 will likely see a sequential deterioration in sell-in trend as Remy Cointreau aims to optimise its trade inventories as it enters FY26. EMEA sell-out in Jan/Feb was positive overall. US depletions: our sense was that Remy Cointreau''s US Cognac value depletion trend has continued to see a slight sequential improvement driven primarily by VSOP (but with 1738 also accelerating). Remy Cointreau believes the VSOP plan is beginning to bear fruit, particularly in Illinois where adjustments have been made on pricing and marketing. Remy Cointreau is not yet seeing the same sequential improvement in Remy Martin''s US sell-out trends. US tariff impact on Q4: Remy Cointreau does not believe its US business benefitted from a pull forward of sell-in demand in fiscal Q425 (cal. Q125) related to anticipated implementation of US tariffs. China: Remy Cointreau had a good Chinese New Year performance (our sense was that CNY depletions were slightly positive) particularly relative to peers, in the context of market conditions which remain tough. At present, there has been no resolution...
Summary of Q325 sales Remy Cointreau''s Q3 LFL sales decline at -21.5% was less severe than co. cons. expectation (-23.7%) with a miss in the Liqueurs and Spirits division (-20.1% vs. co. cons. -16.5%) more than offset by the beat in the Cognac division (-22.0% vs. co. cons. -27.0%). US Cognac volume depletions declined -11.5% in Q3 (a modest sequential improvement vs. Q2 at -11.9%). Group value depletions in both APAC and EMEA improved sequentially, and both grew by mid-single digits in Q3. For FY25, Remy Cointreau now expects an organic sales decline of close to -18%. News We highlight that Remy Cointreau expects its US volume depletions to be flat at best in Q4 (January was flattish). Earnings We revise our FY25e/ FY26e/ FY27e EPS by c.-2%. Investment thesis While LFL sales may soon benefit from lapping destock comps, longer-term concerns for Cognac in both the US and China persist. Rating and target price We maintain our Neutral rating. Our target price moves from EUR58 to EUR57. 15 questions for management You commented on trends in the US control states often being a first indicator of what is really happening in the market due to low stock levels. When do you therefore expect overall US Cognac division volume depletions to return to growth?
BNPP Exane view There were some directionally encouraging comments on the call. Specifically, CNY so far has been soft but better than expected and US volume depletions are expected to sequentially improve in Q4 (to flat at best which is in-line with January). However, by Remy Cointreau''s own assessment this is not sufficient to qualify as a spark yet. Overall, we heard nothing on the call that would lead us to expect the shares to shift materially from the current c.-3% level today. Highlights: QandA . China: in Q3 sales declined low-DD but value depletions grew +MSD (with strength of direct / e-comm and CLUB partly offset by cash pressures on the indirect channel and weakness for the high-end). Consumers are more active than the intermediate layers. The off-trade (banquets) was weak due to competitive pressure on XO. The soft sell-in in Q3 was also linked to some collateral effect from the anti-dumping investigation as duty free was not permitted to re-stock. CNY timing will have a negative impact on Q4 of EUR5m. CNY so far is a bit soft overall but better than expected with value depletions positive YOY. The depletion trend is better closer to the consumer (e.g. retailer and tier 2 wholesalers better than tier 1 wholesalers). . US: Q3 sales down vs. strong DD with value depletions down c.-10%. Retail chains are now over-performing independent stores (where Remy Cointreau over-indexes) where de-stocking is still weighing. By states, see some positive signs with volumes almost flat in the control states. Open states were more negative driven by Illinois and NY while vols in California were positive. Overall, does not qualify as a spark yet. . US by division: Q3 value depletions declined mid-teens for US Cognac. For US, LandS the wholesalers are cautious partly due to weakness of Cognac. . US outlook: for the FY expect sales a strong DD decline with slight sequential improvement in H2 vs. H1. Q4 should be back to LFL sales growth driven by soft...
BNPP Exane View The Q3 LFL sales decline (-21.5%) is not as steep as expected by consensus (co. cons. -23.7%) driven by the Cognac division. However, more importantly, while the sequential volume depletion trend for Remy Martin in the US has improved (-11.5% in Q3 vs. -11.9% in Q2) the improvement is very modest and therefore US wholesaler inventory levels remain broadly unchanged at ''slightly less than 5 months'' of depletions. We expect consensus EBIT estimates to be subject to modest (c.-1%) cuts on the back of a slightly reduced top-line outlook for FY25e. While the share price reaction is tough to call, combined with LVMH''s directionally cautious comments on the expected 2-year recovery of its Cognac and Spirits division yesterday evening, we call Remy Cointreau shares small down today. Headline metrics . Group LFL: -21.5% (co. cons: -23.7%) . Group sales: EUR254.1m (+3.8% vs. co. cons.) . Remy Martin LFL: -22.0% (co. cons: -27.0%) . Liqueurs and Spirits: -20.1% (co. cons: -16.5%) Top-line drivers Scanning the top-line trends by division, the Q325 organic sales came in slightly ahead of company consensus expectations (-21.5% vs. co. cons -23.7%) driven by the Cognac division (-22.0% vs. co. cons -27.0%) which was partially offset by weaker trends in the Liqueurs and Spirits division (-20.1% vs. co. cons. -16.5%). Bottom-line drivers N/A - only a sales update. Other metrics . 9M Group LFL: vols -13.6%, price / mix -4.2%; . 9M Cognac LFL: vols -14.7%, price / mix -4.3%; . 9M LandS LFL: vols -12.2%, price / mix -2.7%; . 9M value depletions: US down mid-teens (vols -HSD); China flat (Q3 +MSD); EMEA down MSD (Q3 +MSD); . US Cognac: Remy Martin US volume depletions declined -11.5% in Q3 (cf. Q2 -11.9%, Q1 -32.3%) and were below Q320 by -34.3% (cf. Q2 -42.8%, Q1 -27.4%). Value depletions declined by mid-teens in Q3 (organic sales down v. strong DD%) with contrasted but promising trends among states (control states outperformed with almost stable volume with...
Summary of H125 results Remy Cointreau''s H1 LFL EBIT decline at -17.6% was less severe than co. cons. expectation (-20.6%). H1 EUR EBIT was +10% ahead of expectation, driven by a combination of the organic beat and FX. H1 LFL EBIT growth at both reporting segments, Remy Martin (-17.9% vs. co. cons. -22.2%) and the Liqueurs and Spirits division (-3.3% vs. co. cons. -16.4%) were ahead of expectation. For FY25, Remy Cointreau expects an organic sales decline of between -15% to -18% and an organic COP margin of 21-22%. News We highlight that Remy Cointreau believe that while it is too early to claim a recovery, it is at least probably at the beginning of stabilisation in US Cognac. Earnings We revise our FY25e/ FY26e/ FY27e EPS by -11% / -18% / -17% primarily driven Remy Cointreau''s quantified FY25e outlook and tax commentary. Investment thesis While US Cognac trends may be nearing a trough, we see downside risk to consensus FY26 profits due to tariffs in China. Rating and target price We maintain our Neutral rating. Our target price moves from EUR63 to EUR58 (reflecting reduction to our profit estimates). 15 questions for management What are the levers you expect to drive EBIT margin expansion from c.21-22% in FY25e to c.33% in FY30e (at FY19/20 scope / FX)?
Summary of Q225 sales Remy Cointreau Q2 LFL sales declined -16.1% (co. cons. -15.4%) with a small miss in Cognac (-20.7% vs. co. cons. -18.0%) partially offset by a beat in the smaller LandS division (-4.9% vs. co. cons. -10.2%). Remy Cointreau revised down its FY24/25 outlook and now expects a double-digit organic sales decline and organic deterioration in its EBIT margin. The reduced guidance reflects persistent low visibility, disappointing H1 sales (US depletions were below expectation) and worse market conditions in China (where a double-digit LFL sales decline is expected vs. flat previously). News We highlight that Remy Cointreau sees Q3 being the toughest quarter, before expecting a bounce back in LFL sales in the US in Q4 (without committing to positive Q4 LFL growth at a group level). Earnings We revise our FY25e / FY26e / FY27e EPS by -13% / -17% / -16% driven by reduction to our FY25e and FY26e organic EBIT assumptions. Investment thesis We do not foresee the near-term improvement in US Cognac sell-out trends nor China consumer demand that we believe are required for a restoration of Remy Cointreau''s multiple. Rating and target price We maintain our Neutral rating. Our target price moves from EUR76 to EUR63 (reflecting reduction to our profit estimates). 15 questions for management Does your expectation of a ''gradual organic improvement'' in EBIT margin in FY25/26 include the likely impact of China Cognac duties?
Summary of Q125 sales Remy Cointreau Q125 LFL sales declined -15.6% (co. cons. -13.6%). The miss relative to consensus expectation was driven by the Liqueurs and Spirits division (-20.4% LFL vs. co. cons. -9.4%) which was impacted by de-stocking / greater caution from wholesalers in a slowing market in the US. Within the Cognac division, US LFL value depletions declined by a strong double-digit-% (volume depletions -32.3%) which was below the company''s internal expectation. China Cognac LFL sales were flat in Q1 (value depletions declined mid-teens after a very strong Q4). News We highlight that Remy Cointreau is not sure if there will be a sequential improvement in its group LFL sales growth in Q2 (vs. Q1 at -15.6%). Earnings We revise our FY25e / FY26e / FY27e EPS by -5% / -6% / -7%. Investment thesis While material uncertainties hang over Remy Cointreau, we believe we have now passed the trough in US Cognac depletion trends and expect LFL growth to inflect in fiscal H225. Rating and target price We maintain our Outperform rating. Our target price moves from EUR111 to EUR103. 15 questions for management In the context of the current higher interest rate environment, how many months of inventory (as a function of depletions) do you believe spirits wholesalers and retailers are willing to hold?
We have adjusted our estimates primarily reflecting lower Q125 LFL sales growth assumption. Our target price moves from EUR113 to EUR111. We do not consider the changes to be material; our rating is unchanged.
Feedback from our London roadshow Yesterday we spent some time with Remy Cointreau (Chairwoman, CEO, CFO and IR) in London. Overall, without shying away from the fact that it is too early to suggest that Cognac trends in either the US or China have materially improved, we felt the company was in a relatively upbeat mood. China Remy Cointreau is on track with its ambitious target for the 6:18 (18th June) shopping festival this year. It believes it has a pioneering approach to e-commerce in China which now accounts for c.25% of market sales led by a best in-class local team. US VSOP has always been a key pillar of the US strategy, but it is likely true that Remy Cointreau had not been investing enough behind it, particularly in volume-driven AandP. Early signs are quite positive on the back of recent changes, but it has only been a few weeks, so it is too early to assess the results. Remy will not compromise its long-term value driven strategy by reducing its prices. External growth opportunities While Remy Cointreau is not in a hurry to do an acquisition, increasing its exposure to Europe would help to balance out the group and add more stability / predictability. Any acquisition would need to meet the criteria of link to terroir and being high-end (relative to its category). Mid-term top-line growth algorithm Within Remy Cointreau''s +high-single digit mid-term LFL sales growth outlook, Remy Cointreau envisages more balance between volumes and price / mix than it had done 2-3 years ago (when it expected closer to +1-2% volume growth and the remainder price / mix). See within for more colour
Summary of FY24 results FY24 LFL Current Operating Profit (COP) at Remy Cointreau declined -27.8% (+30bp ahead of co. cons) and adjusted net profit was a c.+4% beat. The -300bp organic COP margin decline was driven by gross margin -130bp and distribution / other -190bp, partially offset by AandP +20bp. From a divisional perspective, Cognac LFL COP declined -33.0% (co. cons -31.7%) while Liqueurs and Spirits division LFL COP grew +18.0% (co. cons +3.6%). Remy Cointreau announced a proposed ordinary dividend of EUR2.0 per share. News We highlight that it is too early to say whether a ''gradual recovery in sales'' over the course of the year will equate to positive organic sales growth in FY25. Earnings We revise our FY25e / FY26e / FY27e EPS by +7% / +5% / +5% driven by a combination of the FY24 EBIT beat (vs. our estimate), FX and lower tax. Investment thesis While material uncertainties hang over Remy Cointreau, we believe we may now be at the point of peak pain and the stock is trading below the estimated value of its inventories. Rating and target price We maintain our Outperform rating. Our target price moves from EUR107 to EUR113. 15 questions for management If China imposes import duties on Cognac of a similar magnitude as those it has on Australian wine (107% to 212% depending on producer), what do you estimate would be the impacts on your business?
We have adjusted our estimates for updated FX. We do not consider the changes to be material; our rating is unchanged.
Summary of Q4/FY24 sales Remy Cointreau Q424 LFL sales declined -0.7% (ahead of co. cons. at -3.4%). Cognac division LFL sales (+15.4%) were materially ahead of consensus (+0.5%) but the LandS division (-27.0% LFL) was materially below (co. cons. -9.7%). Remy Cointreau US Cognac Q4 volume depletions declined -27.5%, deteriorating from the -15.3% decline in Q3, reflecting a combination of soft underlying demand, cautious behaviour from retailers and a persistent promotional environment. News We highlight that Remy Cointreau believe a best-case scenario for a return to US Cognac value depletion growth is H2 FY24. Earnings We revise our FY24e / FY25e / FY26e EPS estimates by c.+2% / c.-4% / c.-4%. Investment thesis While material uncertainties hang over Remy Cointreau, we believe we may now be at the point of peak pain and the stock is trading below the estimated value of its inventories. Rating and target price We maintain our Outperform rating. Our target price moves from EUR108 to EUR106. 15 questions for management In the context of the current higher interest rate environment, how many months of inventory (as a function of depletions) do you believe spirits wholesalers and retailers are willing to hold?
We have adjusted our estimates ahead of Remy Cointreau''s Q424 sales reflecting minor operational changes to our estimates. We do not consider the changes to be material; our rating is unchanged.
Summary of Q324 sales Remy Cointreau Q324 LFL sales declined -23.5% (in-line with co. cons.) and the delivery by division was also in-line with consensus expectation: Cognac LFL sales declined -33.9% (co. cons. -34.1%) and Liqueurs and Spirits LFL sales grew +4.3% (co. cons. +4.0%). Remy Martin Q3 value depletions declined -13.7% (improving from -32.8% in Q2) and grew slightly in China. While Q3 sales were therefore in-line with expectations (and commentary on the conference call generally pointed towards consensus estimate downgrades) Remy Cointreau shares experienced a material relief rally, closing up +15% on the day. News It is too early for Remy Cointreau to say whether its group LFL sales growth will be positive in FY25. Earnings We revise our FY24e / FY25e / FY26e EPS estimates by -3% / -9% / -8%. Investment thesis While material uncertainties hang over Remy Cointreau, we believe we may now be at the point of peak pain and the stock is trading below the estimated value of its inventories. Rating and target price We maintain our Outperform rating. Our target price moves from EUR115 to EUR109. 15 questions for management Given that incremental pricing opportunities in 2024 are likely to be limited, do you expect to be able to expand your EBIT margin in FY25e?
In view of the slashing of the 2024 outlook one month ago, expectations for the H1 figures were pretty low. Regarding the attractive level of the share price, a share buyback programme many come under the spotlight Efforts to cut costs are in progress and will safeguard profitability The limited visibility in the US and China is persisting and continues to feed the weak sentiment on the stock The FY 2025 consensus is likely to be revised downward
Summary of H124 results Remy Cointreau reported a H124 LFL Current Operating Profit (COP) decline of -43.0%, broadly in line with company consensus (-43.4%) with adjusted net profit beating consensus estimates by +2.4%, largely driven by lower tax due to improved geographical mix. From a divisional perspective, the majority of the weakness was driven by Cognac, in which LFL COP declined by -47.2% (co. cons -46.5%) while in the Liqueurs and Spirits division LFL COP declined by -3.5% (co. cons +3.5%). News We highlight that Remy Cointreau expect FY25 group LFL sales growth to be below the high-single digit mid-term growth algorithm. Earnings We revise our FY24e / FY25e / FY26e EPS estimates by -2% / -11% / -7%. Investment thesis While restoration of market confidence in Remy Cointreau''s US Cognac business will take time, we believe it will come and with it a strong rebound in the shares. Rating and target price We maintain our Outperform rating. Our target price moves from EUR150 to EUR140 (driven by revisions to our profit estimates). 15 questions for management Do you expect reported (EUR) sales in your US Cognac business to be higher or lower in FY25 than they were in FY20?
What''s the value of Remy Cointreau''s aged inventories? We upgraded Remy Cointreau to Outperform in August (see 5 questions and 1 answer) on the basis that, while visibility on US cognac demand trends was low, we saw good risk-reward in the shares. Regrettably, with the benefit of hindsight, the timing of our upgrade was poor. The recent further decline in the share price has prompted one question more than any other from investors in recent weeks: ''What''s the value of Remy Cointreau''s aged inventories?'' An argument we are not great fans of, but one that matters nevertheless In truth we are not great fans of the argument that estimating the value of Remy Cointreau''s aged inventories is a good basis for valuing the business. For, in reality, if we are wrong and there is a structural demand issue for high-end cognac, Remy''s aged inventories may be worth relatively little. Nevertheless, recent investor questions highlight that it is a metric that matters to the market. Based on the value of its ageing stock, we derive a valuation range of EUR106-119/share In the report we explore three approaches to calculating an estimated market value for Remy Cointreau''s ageing inventories. We derive valuations based on: 1) realisable value based on an estimated gross margin; 2) realisable value based on estimated Cognac liquid cost; 3) based on an scenario whereby the company winds down its remaining Cognac liquid in a hypothetical c.8-year DCF. Based on these approaches, we derive a valuation range of EUR106-119/share (at the end of FY24e). Conclusion: we believe we could be nearing a valuation trough We are not great fans of valuing Remy Cointreau based on its aged inventories. However, based upon our analysis and the number of questions we are receiving on inventory value, we would suggest that we are close to a valuation trough.
Summary of Q2/ H124 sales With its Q2 sales update Remy Cointreau materially cut its FY24 outlook and now expects group LFL sales to decline between -15-20% (previously stable) and aims for a ''contained organic decrease'' in its COP (current operating profit) margin (previously stable). As to the drivers of the profit warning, Remy Cointreau commented on the guidance reduction being: 60% driven by the US (tougher market conditions and a fiercely promotional environment in US Cognac); 25% by China (slower than anticipated recovery post-Covid) and 15% by RoW (more moderate annual growth is expected in EMEA in a persistently inflationary context). As to Q2 itself, LFL sales at a group level declined -10.8% (co. cons. -8.7%) with the miss driven by the Cognac division. News We highlight that Remy Martin US Cognac volume depletions declined -37.4% in Q2 (cf. -5.5% in Q1) which implies volumes -34.9% below pre-pandemic (cf. +8.1% ahead in Q1). Earnings We revise down our FY24e / FY25e / FY26e EPS estimates by -20% / -13% / -13%. Investment thesis While restoration of market confidence in Remy Cointreau''s US Cognac business will take time, we believe it will come and with it a strong rebound in the shares. Rating and target price We maintain our Outperform rating. Our target price moves from EUR173 to EUR150. 15 questions for management What level of value depletion decline do you assume for your US Cognac business at the top and bottom ends of your revised group FY24 LFL sales guidance?
The weaker than expected performance in China and the worsening situation in the US capsized the Cointreau ship. While a profit warning had been expected, its magnitude caught everyone off guard The historical premium for Remy is now out of the picture and this might be an attractive entry point for the stock
A miss on the street’s expectations and a profit warning for Remy Cointreau. The situation is worse than we had expected.
For the Q2 results, all eyes are likely to be on the company’s outlook. The FY 2024 guidance is unlikely to be reached. However, the consensus has already priced this in. The historical premium for Remy is now out of the picture and this might be an enticing entry point for the stock.
Which company has invested more into marketing compared with pre-Covid than any other Beverages or ''Luxury'' peer? Answer: Remy Cointreau. Which Beverages company is set to grow LFL sales at a sector-leading +9.6% rate (FY25e)? Answer: Remy Cointreau. Which company do we see upside to mid-term (FY30e) profit targets? Answer: Remy Cointreau. Which company is trading at around a multi-year trough relative to Luxury Goods? Answer: Remy Cointreau. Which company are investors circling but fearful to touch? Answer: Remy Cointreau. Investors want firm evidence that the US Cognac business is not structurally impaired. While we have had some encouraging short-term data, the reality is that once a solid longer-term data case can be constructed, the shares will have moved. With the stock having de-rated by c.120% relative to EU Beverages on consensus forward P/E since its pandemic high, we believe that the balance of risk and reward is favourable. We upgrade Remy Cointreau to Outperform While we view risk to H1 consensus EBIT as downside skewed (we are -5% below VA cons), we believe the market will look through this and look forward to a strong inflection in H2. We forecast +106% H2 LFL EBIT growth, putting our FY24e EBIT c.+2% ahead of VA cons. We upgrade our recommendation to Outperform and raise our target price to EUR190 (from EUR157).
Summary of Q124 sales Remy Cointreau Q124 LFL sales declined -35.0%, in-line with consensus expectation (co. cons. -35.6%). The shape of the delivery by division also matched that per consensus expectation: Cognac division LFL declined -44.7% (co. cons. -45.8%) while LandS division LFL declined -11.4% (co. cons. -10.8%). US Cognac value depletions declined -4.5% in Q1 and improved sequentially throughout the quarter with June positive. US Cognac volume depletions declined -5.5% in Q1 (cf. -31.8% in Q4) implying +8.1% growth vs. a pre-pandemic (Q120) base. Remy Cointreau kept its FY24 outlook unchanged. News We highlight that Remy Cointreau expects its group LFL sales growth to remain negative (by single digits) in Q2. Earnings We keep our EPS estimates materially unchanged. Investment thesis In the context of sequentially improving US cognac depletion trends, we are tempted by the relative valuation of the shares but believe risk to consensus H1 EBIT remains downside skewed and therefore remain Neutral. Rating and target price We maintain our Neutral rating. Our target price moves from EUR154 to EUR157. 15 questions for management Relative to a pre-pandemic (calendar 2019) base, your US Cognac volume depletions were ahead by +8.1% in Q1 from being -12.2% below in Q4. What were the drivers of the material acceleration in trend?
Although this Q1 was hardly surprising, the confirmation of the guidance brings warmth to the heart, especially with the confirmation of a sharp rebound in the US from Q3. The positive US value depletions in June and China back on track reinforce our belief that the FY guidance is attainable.
Summary of FY23 results FY23 LFL Current Operating Profit (COP) at Remy Cointreau grew +16.2% (c.+180bp ahead of co. cons) and adjusted net profit was a c.+2% beat. FY group COP margin increased +230bp to 27.7% (co. cons 27.4%). Organic COP margin expansion of +140bp was driven by gross margin expansion of +260bp and distribution / other of +10bp, partially offset by AandP investment of -130bp. From a divisional perspective, Cognac LFL COP grew +14.7% (co. cons +14.1%) while Liqueurs and Spirits division LFL COP grew +18.1% (co. cons +10.9%). Remy Cointreau announced a proposed dividend of EUR3.0 per share (made up of an EUR2.0 ordinary dividend and an EUR1.0 exceptional dividend). News We highlight that Remy Cointreau expects its group Q124 LFL sales to decline by at least mid-30s. Earnings We revise our FY24e / FY25e / FY26e EPS by c.+2%. Investment thesis We are tempted by the relative valuation of the shares but are mindful that it will likely not be until January-2024 (Q324 sales) that Remy Cointreau proves it is able to return the group to positive LFL sales growth. Rating and target price We maintain our Neutral rating. Our target price moves from EUR167 to EUR157. 15 questions for management Your FY23 gross margin reached 71.6% at FY19/20 scope and FX. Given that you continue to target a 72.0% gross margin in FY30e, should we expect minimal gross margin expansion in the intervening years?
Despite the new impressive results, it is the outlook for the US market that dominates the scene, reflected by a decrease of approximately -5.0% in the stock variation. The first-quarter revenue is expected to decline by 30% to 40%. Consumers are not hesitating to switch to less premium products, as Tequila continues to encroach upon the market share of cognac.
Making sense of US Cognac With the dust having settled after Remy Cointreau''s warning FY24 sales / profits last Friday, with this report we try to make sense of what''s happening in US Cognac. We updated estimates/TP last week. We focus on sell-out trends While high US distributor inventories (5-6 months of depletions) lead us to forecast un-Staples like near term revenue trends (-27.5% group LFL in Q124e), ultimately so long as end demand remains intact this is simply an issue of timing. We therefore analyse the available high frequency US sell-out data (US IRI off-trade scanner data, Numerator, and NABCA) to try to gauge end-consumer demand. The bull case: US Cognac off-trade sell-out trends appear to have stabilised The bull case: the shares are relatively cheap in a historical context (even after consensus reflects the warning); China provides upside risk and the bad news on US Cognac has now been cleared out. Most importantly, we note US Cognac industry off-trade sell-out volumes have now returned to pre-pandemic levels and have been broadly stable (vs. a pre-pandemic base) for the past 6 quarters. The bear case: the near-term issues in US Cognac are more structural The bear case: the near-term issues in US Cognac are symptomatic of end-demand for Cognac being eroded by consumers switching to Tequila and Bourbon. As US consumer budgets comes under further pressure, the unwind of Remy Martin''s high US distributor inventories will be more prolonged than expected, not helped by the level of promotional activity by peers. Conclusion: we are tempted but believe a near-term material re-rating will prove elusive While visibility is not great, from the data that we have we believe end-demand for the US Cognac business has not materially deteriorated. We are therefore tempted to turn more positive on the stock based on its relative valuation. However, we are mindful that it will likely not be until January-2024 (Q324 sales) that Remy Cointreau...
In the face of normalization and a slowdown in consumption in the United States, Cognac experienced lower-than-anticipated trading during Q4 23. The market’s overreaction is attributed to the FY 24 outlook.
Summary of Q4/FY23 sales Remy Cointreau Q4 LFL sales grew +10.2% (modestly ahead of co. cons at +9.1%) with weaker than expected growth in Cognac (+2.9% LFL vs. co. cons. +5.0%) more than offset by strength in the LandS division (+26.2% LFL vs. co. cons +18.4%). Q4 value depletions in the US declined by very strong double-digits but grew by mid-teens in China (with March at +700%). While Remy Cointreau''s FY23e COP guidance remains unchanged, its new FY24e outlook for stable LFL sales growth and COP margin is materially below consensus expectation. News We highlight that Remy Cointreau expects its US Cognac business to achieve positive value depletion growth in FY24e. Earnings We revise our FY23e / FY24e / FY25e EPS by -3% / -16% / -13% reflecting Remy Cointreau''s outlook commentary. Investment thesis Our FY24e estimates will likely be broadly in-line with where consensus numbers land post-FY23 sales, and we struggle to envisage a re-rating in the shares until fears over extended declines in US Cognac have passed. Rating and target price We maintain our Neutral rating. Our target price moves from EUR172 to EUR167. 15 questions for management What is your best estimate of where end consumer volume demand is trending vs. pre-pandemic levels for the different qualities of your US Cognac business and the wider category in the US?
Summary of Q323 sales Q3 LFL sales at Remy Cointreau declined -6.0%, slightly ahead of co. cons at -6.7% and broadly in-line with the mid-to-high single digit LFL decline guided by the company at H123 results. LFL sales in the Cognac division declined -11.0% (co. cons -11.4%) with Remy Cointreau commenting on mid-teens growth in Mainland China more than offset by a very strong double-digit decline in the US. LFL sales in the Liqueurs and Spirits division grew +10.1% (co. cons +8.9%) driven by mid-teens growth in the US. News We highlight that Remy Cointreau expects to experience a group LFL sales decline in Q124 and H124 driven by continued normalisation in US cognac consumption trends and the phasing of comps. Earnings We revise our FY23e / FY24e / FY25e EPS by c.0% / c.-4% / c.-3%, driven by a combination of updated FX and revised LFL growth assumptions. Investment thesis Our FY23e/FY24e estimates are broadly consensual, and we struggle to envisage a re-rating in the shares until fears over slowdown in US Cognac have passed. Rating and target price We maintain our Neutral rating. Our target price moves from EUR175 to EUR170. 15 questions for management What gives you confidence that the increase in penetration that the Cognac category experienced in the US through the pandemic will not revert to pre-pandemic levels?
The Q3 numbers were better than expected but the US is once again worrying. Last year’s exceptional levels justify a slowdown, but how far down do we really need to go before we become concerned?
Summary of H123 results Remy Cointreau reported H123 LFL COP growth of +27.2%, a +340bp beat vs. company consensus expectation (+23.8%). Strength in the Cognac division, which saw LFL COP growth of +35.7% (co. cons. +23.9%) was partially offset by a LFL COP decline in the Liqueurs and Spirits (LandS) division (-27.5% vs. co. cons. +18.9%). Within LandS we note that AandP as a % of sales increased by 760bp YOY. Group adj. net profit was c.+9% ahead of consensus expectation with the gap vs. the beat at the EBIT level (Group COP was +4% ahead) driven by tax (lower tax rate in France) and finance costs. News We highlight that driven by the expected normalisation of cognac trends in the US, Remy Cointreau expects its Q3 LFL sales to decline by mid-to-high single digits followed by a rebound to positive growth in Q4. Earnings We revise our FY23e / FY24e / FY25e EPS by c.+3% / c.+1% / 0%. Investment thesis We believe risk on consensus LFL profit expectations is now more evenly balanced than it was and struggle to argue for a re-rating at Remy Cointreau. Rating and target price We maintain our Neutral rating. Our target price moves from EUR172 to EUR173. 15 questions for management What level of AandP investment (as % of sales) do you believe is most appropriate for your business over the mid-term?
Summary of Q223 sales Q2 LFL sales at Remy Cointreau grew +16.2%, comfortably ahead of company consensus expectation (+14.3%). The beat was driven by both the Cognac (LFL sales +15.6% vs. co. cons. +13.2%) and the Liqueurs and Spirits divisions (LFL sales +22.2% vs. co. cons. +19.3%). Within Cognac, LFL sales in North America declined by low-single digits in Q2 (impacted by the decline in US VSOP) while in Mainland China LFL sales grew by mid-teens in H1 (driven by very strong double-digit growth in Q2). News We highlight that Remy Cointreau expects limited LFL sales growth in H223 characterised by a mid-to-high single digit decline in Q3 before a rebound back to growth in Q4. Earnings We revise our FY23e / FY24e / FY25e EPS by -3% / +1% / +1%. Investment thesis We believe risk on consensus LFL profit expectations is now more evenly balanced than it was and struggle to argue for a re-rating at Remy Cointreau. Rating and target price We maintain our Neutral rating. Our target price moves from EUR199 to EUR172 (driven by an increase in our WACC, which is in-turn is driven by an increase in our risk-free rate assumption). 15 questions for management You are targeting a mid-term (FY30) EBIT margin of 33.0% at FY19/20 FX / scope. Please could you update us as to what this target implies at current FX / scope?
It seems that, when one’s valuation is at a premium to peers, the slightest slip-up can be very costly. The market sanctions cautious statements that surprise no one but themselves.
