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Research Tree provides access to ongoing research coverage, media content and regulatory news on REMY COINTREAU. We currently have 6 research reports from 1 professional analysts.
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H1 results: China fuels margin improvement
24 Nov 16
H1 results: as a reminder the group reported 4.1% OG in sales at its trading update in October. The current operating profit was up +15.9% (vs. cons. at 11.2%, of which +7% organically). The operating margin expanded by 270bp to 24.1% (cons. 23.2%). By division. Remy Martin reported +410bp in the current operating margin, being fuelled by high-end products (renewed growth in China, a robust US). L&S reported +180bp in the operating margin driven by the US, an improved France, Russia and also China. For Partner brands, the margin contracted by 90bp due to the end of a contract for champagne distribution. The group’s net profit is up 14.7%. FY guidance confirmed: growth in current operating profit at constant FX and scope of consolidation.
Q2 above expectations lifted by the US and China
18 Oct 16
H1 update: sales grew organically +4.1% (cons. +2.4%, Q2: +7.4%). On reported figures sales were up +2.5% (FX: -1.6%). H1 performance by division: Remy Martin +5.1% (cons. +3.1%), L&S +5.1% (cons. +2.3%), Partner brands -3.1% (cons. -1.3%). The company maintained its FY guidance: improvement in current operating profit, assuming constant FX and scope of consolidation.
Flat Q1 but the underlying trends are reassuring
20 Jul 16
RC released its Q1 update. Sales were flat on an organic basis (vs. cons. at +1.5%) and -2.1% on reported figures. Organic performance by segment: Remy Martin -0.5% (cons. +0.9%), Liqueurs & Spirits -0.8% (cons. +2.9%) and Partner Brands +4.3% (cons. +1.7%). As a reminder, Q1 is a relatively small quarter for the company (c. 20% contribution to sales). Remy Cointreau expects organic sales to accelerate in the coming quarters and maintains its FY guidance.
Good FY driven by a strong US; FY guidance reflects volatility of markets
09 Jun 16
RC released its FY accounts this morning. As a reminder, the group reported +0.3% OG in sales in April. The organic operating profit was up +6.1% (vs. consensus +3.6%) and +14.4% on reported figures. OG operating profit by segment: Remy Martin +6.4% (cons. +4.3%), Liqueurs & Spirits -2.8% (cons. +1.1%), Partner brands -22.9% (cons. -12.5%). In the reported figures, the operating margin was up +80bp to 17% (RM +80bp, L&S -170bp, PB -60bp). Net profit attributable to the group was up 10.6% to €102.4m. The proposed dividend is €1.60 (vs. €1.53 last year). For FY16/17, the group expects to accelerate its move upmarket and to deliver growth in organic operating profit.
19 Apr 16
Remy Cointreau reported its Q4 and FY sales update. In Q4, Remy Martin’s sales grew +12.3% (cons. 7.5%) driven by China, Liqueurs & Spirits grew +6.9% (cons. 4.1%), whereas Partner brands recorded +2.9% (cons. -4.5%). On reported figures, Q4 sales grew +12.2%. On a FY basis, the group’s sales grew 0.3% (Remy Martin +3.2%, Liqueurs & Spirits -1.5%, Partner brands -8.1%) and +8.9% on reported figures.
Initiating coverage of Rémy Cointreau
10 Mar 16
Recommandation and upside We initiate coverage on Rémy Cointreau (€3.06bn market capitalisation) with a REDUCE recommendation and a target price of €65.6 (4% upside). Our valuation is based on the following drivers: Business and trends Although Rémy Cointreau is a relatively small player in comparison to Diageo or Pernod Ricard, the company occupies a significant position in the spirit industry as it is believed to be the leading high-end cognac producer. Cognac (Rémy Martin) is the company’s core asset, which contributes to c. 70% of group EBIT, the rest being Liqueurs & Spirits (c.25% of EBIT), and Partner brands (c.5% of EBIT). Rémy Cointreau’s portfolio is skewed to the high-end category of cognac, i.e. most of products have been ageing for a minumum of four years. Consequently, the company has relatively high inventory levels in comparison to other cognac players, not mentioning other spirit players. Cognac is a difficult product category: on the one hand cognac prices rise with ageing, which should be seen as an advantage, on the other, the age-driven portfolio is limited in terms of innovations. Additionally, cognac consumption is subject to consumer swings, and cognac ageing costs money. Rémy Cointreau seems therefore to operate in a niche which is not really comparable with other spirits players but which has much in common with the luxury sector. The company’s objective by 2019/20 is to increase the contribution of Exceptional Spirits (the category in which one bottle is worth >$50, a market globally estimated to be $18bn) to 60-65% of the group’s sales (vs. 45% in 2014/15) and become a global leader in this category. This should be achieved via brand extensions into the upper categories and potential small acquisitions in the premium category. Need to know • The global cognac industry has become very dependent on Asian swings, although an increasing popularity in the US has been something of a counterweight to the volatile emerging markets. • The cognac industry has high barriers of entry (linked to production methods and raw materials used – appellation d’origine contrôlée, packaging and stocking which translate into the premium quality and luxury character of the products) hence the pricing power is relatively high. • Rémy Cointreau generates a significant part of its sales around Christmas and New Year’s Eve (November and December) and the Chinese New Year (January and February). As a result, any event arising during these periods may have an impact on the group’s annual results. • In FY 2013/14, the company results was hit hard by Chinese anti-corruption and anti-extravaganza laws. Rémy Martin’s sales decreased by c.23%, whereas operating profit in cognac was cut by c.42%. Since then, the company has been trying to relaunch its growth in China but visibility remains very low. • In FY 14/15, the US became Rémy Cointreau’s most important market in terms of sales, surpassing China. • The group generates c.75% of its net sales in currencies other than the euro, whereas most of the production is within the eurozone. The principal currencies to which Rémy Cointreau is exposed are: the US dollar, Chinese yuan, Hong Kong dollar, Barbadian dollar, Russian rouble and sterling.
Using their loaf
30 Nov 16
Finsbury Foods has been transformed by a series of acquisitions that has contributed to revenue and earnings nearly doubling over the last three years. Record levels of capital investment continue to improve the Group’s competitive position, whilst exposure to growth segments of the food market is helping likefor-likes. Profit growth is expected to slow in the current year in the absence of acquisitions but underlying trading remains resilient despite some cost headwinds, whilst debt reduction is accelerating. The rating is undemanding and the recent share price weakness has created a buying opportunity.
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
04 Nov 16
Breaking with convention, this Quarter we take the temperature of the expanding non-listed casual dining and bar operator sector. Looking at the top 50 operators, it appears that the £80bn market for eating and drinking out in the UK is alive and well. The AlixPartners Growth Company Index (October 2016) shows that 2-year profit CAGR has improved over the last few years, and recent surveys from Greene King, Coffer Peach and Deloitte highlight elevated spend on out-of-home occasions.