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Investing.com -- Rémy Cointreau (EPA:RCOP) shares rose by 4% Friday after the company raised its full-year profit guidance and posted stronger-than-expected first-quarter sales, led by a sharp rebound in Liqueurs and Spirits and reduced tariff impact in China.
Organic sales rose 5.7% in the quarter ended June 30, reaching €220.8 million. That beat the consensus estimate of €213.9 million.
The French company which makes cognacs, liqueurs and champagne reaffirmed its full-year topline outlook for mid-single-digit organic growth.
Rémy Cointreau now expects operating profit to decline by a mid- to high-single-digit percentage for the fiscal year, compared with the previous forecast of a mid- to high-teens drop.
Rémy Cointreau now expects operating profit to decline by a mid- to high-single-digit percentage for the fiscal year, compared with a prior forecast of a mid- to high-teens drop.
Rémy Cointreau now expects full-year operating profit to decline by about 6% to 7%, compared with a prior forecast of a mid- to high-teens drop. The company reduced the expected tariff impact from China to €10 million from €40 million.
“We would highlight that the mid-point of the updated guidance range (c.negative -6-7% on EBIT) is slightly worse than current consensus -4.5%, however it includes a punitive -€35m impact from a tariff rate of 30%,” Jefferies said in a note.
Cognac sales rose 1.3% to €131.3 million, ahead of the 0.5% consensus. U.S. shipments grew by a mid-teens percentage on a low comparison base, while depletions fell in the low double digits.
In China, Cognac declined by a low single-digit rate amid soft demand and travel retail disruptions.
Liqueurs and Spirits posted 17.3% organic growth to €86.2 million, surpassing expectations of 5.8%. Growth was driven by double-digit gains in North America and Asia-Pacific, with direct-to-consumer sales in China including e-commerce rising more than 10%.
In EMEA, Liqueurs and Spirits rose in the low single digits, with stronger performance in Benelux and France.
Partner Brands revenue fell 41.7% to €3.3 million, below the €5.5 million consensus. The segment saw declines across key markets.
By region, North America reported double-digit growth in Liqueurs and Spirits, though Cognac price mix in the U.S. fell 5 points year over year. Latin America saw triple-digit growth in Cognac and double-digit growth in Liqueurs and Spirits.
In EMEA, Cognac declined in the double digits, with weakness in the U.K. and Germany.
In Asia-Pacific, travel disruptions reduced performance by 6.5 percentage points. Rest of Asia saw a low double-digit decline, affected by promotions and soft tourism.
Foreign exchange effects reduced sales by an estimated €50 million to €60 million and operating profit by €15 million to €20 million.
These figures are higher than previous forecasts of €30 million to €35 million and €10 million to €15 million, respectively.