By Emma Rumney
LONDON (Reuters) -French spirits maker Remy Cointreau reported its first quarter of sales growth since early 2023 and raised its full-year profit guidance on Friday after damaging Chinese tariffs were reduced.
Sales have slumped in Remy’s key U.S. and Chinese markets in recent years, forcing the company into multiple guidance downgrades and to scrap medium-term sales targets. But it said in June that the worst was over.
The maker of Remy Martin cognac and Cointreau liqueur said its first-quarter organic sales rose 5.7% year-on-year, beating analyst forecasts and returning to growth soon after new CEO Franck Marilly took the helm in June.
Shares rose over 5.5%, even as Chief Financial Officer Luca Marotta warned that Remy’s sales would decline in the second quarter before rebounding later in the year, and that trends in the U.S. remained below expectations.
“It was a positive quarter, so I’m very proud…after eight negative (quarters),” Marotta told analysts on a call.
Remy said the quarterly rise was driven by a low base of comparison a year ago in the United States. Sales in China continued to fall, but Remy described the decline as “limited”.
“After two years of declining growth, I think it’s the beginning of good news,” said Charles de Riedmatten, fund manager at Myria AM, a Remy investor.
Questions remained about underlying demand for cognac and how the new CEO, who has a background in luxury goods but not spirits, will perform, he said.
High U.S. inflation and downbeat Chinese consumers had already knocked Remy’s business even before tariffs – actual or threatened – emerged in both markets.
In July, the cognac industry agreed a deal with China that would ease steep duties imposed since October 2024.
As a result, Remy now expects the annual blow from tariffs to fall to 45 million euros from 65 million euros previously, driven by a reduction in the impact from Chinese duties from 40 million euros to 10 million euros.
However, it hiked the hit expected from U.S. tariffs on European goods by 10 million euros, to 35 million euros, to reflect U.S. President Donald Trump’s threat to impose a 30% tariff on EU imports from August 1.
Remy expects its full-year operating profit to decline by mid- to high-single digits percentage, an improvement on the mid- to high-teen decline it previously anticipated.
The company makes around 70% of its sales from cognac, mostly in the U.S. and China, leaving it more exposed to tariffs and economic downturns than more diversified peers.
($1 = 0.8518 euros)
(Reporting by Emma Rumney; Editing by Mark Potter and Rachna Uppal)
