Remy’s first-half profit falls on soft Chinese demand

PARIS: French spirits group Remy Cointreau SA posted a 7.3% fall in first-half likefor-like operating profit yesterday, blaming soft demand for its premium cognac in China.

The maker of Remy Martin cognac, Cointreau liqueur and Mount Gay Rum, which enjoyed robust demand in the United States, its top market, kept its forecast for positive growth in current operating profit at constant exchange rates in the 2015/16 full year, excluding acquisitions and divestments.

Current operating profit for the six months to Sept 30 reached €107 million ($114 million).

The performance was slightly below analysts’ expectations for €107.6 million in operating profit, according to a Thomson Reuters I/B/E/S poll.

The Remy Martin cognac division, which accounts for 80% of group profit, saw its operating profit fall 5.8% like-for-like to €85.9 million.

Cognac achieved a strong performance in the United States, driven by the success of the 1738 Accord Royal cognac. But this did not offset a decline in Asia-Pacific, the group said, blaming changes in its distribution network in China and cautious Chinese wholesalers.

The US is now a bigger market for Remy Cointreau than China, accounting for slightly over 30% of sales against nearly 20% for China.

Remy Cointreau, like rivals, has been hit by the Chinese government’s crackdown on ostentatious spending and slowing economic growth in the world’s second-biggest economy.