Rémy Cointreau cuts FY26 outlook after Q2 sales miss

Investing.com -- Rémy Cointreau (EPA:RCOP) SA on Thursday cut its full-year 2026 guidance and reported a sharper-than-expected second-quarter sales decline, citing weaker trading in the United States and China.

The French spirits producer said organic sales fell 11% in the second quarter, missing company-collated consensus expectations of a 9.5% drop. 

Analysts at Morgan Stanley said the “magnitude of today’s cuts is significantly larger than expectations” as the group lowered its growth and profit forecasts.

Rémy Cointreau now expects full-year organic sales growth to range from flat to low single digits, down from a prior forecast of mid-single-digit growth. 

It also projects an organic EBIT decline of between the low double digits and mid-teens percentages, compared with previous guidance for a mid-single-digit fall. 

Morgan Stanley said the updated guidance “implies mid-teens% cuts to FY26 EBIT at the midpoint.”

Foreign exchange headwinds are expected to weigh further on results, with a €50-60 million negative impact on sales and a €25-30 million hit on EBIT, widening from the earlier forecast of €15-20 million. 

The company also trimmed its expected tariff impact to €25 million from €30 million, including €5 million in China and €20 million in the United States.

In its core U.S. cognac business, sales grew by a mid-teens percentage during the quarter. Depletion volumes fell 3.5% over the last three months, easing from an 8.5% decline in the prior period. Overall U.S. inventories, including local and shipped stock, remained steady at “close to 4M” months of supply, the report said.

Mainland China, another key market, saw cognac sales fall 25%, affected by “stricter discipline and austerity measures impacting consumer confidence,” Morgan Stanley said.

In Europe, the Middle East and Africa, cognac sales declined by the mid-teens percentage, pressured by “strong competitive / promotional pressures in most markets and weak demand.”

The company’s liqueurs and spirits division recorded a 5.3% drop in organic sales during the quarter. The United States and EMEA regions both fell by mid-single digits, partly due to “adverse phasing after a stronger Q1.” 

In terms of depletions, U.S. value depletions for Cointreau and The Botanist were flat in the second quarter, while EMEA value depletions rose slightly in the first half.

For the first half of fiscal 2026, Rémy Cointreau reported net sales of €490 million, down 8.3% year on year. EBIT stood at €117 million, representing an organic decline of 14.3%.

The EBIT margin was 23.7%, down 390 basis points from the previous year. Adjusted net profit reached €67 million, down 27.2% from a year earlier.

Morgan Stanley said the reduced outlook reflects “deteriorating market conditions in China and the weaker-than-expected rebound in US sales,” while the foreign exchange outlook continues to worsen.