Remy Cointreau's higher profit forecast gives warm glow

By Dominique Vidalon

PARIS (Reuters) -Remy Cointreau raised its full-year profit forecast after a better-than-expected first half, driven by strong demand for its premium cognac in China, the United States and Europe, lifting its stock to a record high on Thursday.

Chief Executive Eric Vallat told journalists the spirits group had made an "encouraging" start to the third quarter in China, thanks to strong sales during the Singles' Day online shopping bonanza and the mid-autumn festival.

Singles' Day business alone makes up 10% of Remy Cointreau's annual sales in China.

The maker of Remy Martin cognac and Cointreau liqueur said it now expected "very strong" organic growth in current operating profit in the 2021/22 financial year. It had previously targetted "strong" growth.

Remy shares jumped as much as 12% to a record high of 209.80 euros.

The company also remained confident of outperforming the premium spirits market and reiterated a forecast for strong organic growth in full-year sales.

The COVID-19 pandemic has boosted Remy's drive towards higher-priced spirits to boost profit margins long term, accelerating a shift among consumers towards premium drinks, at-home consumption, cocktails and e-commerce, Vallat said.

Asked to comment on the market consensus for 24.7% organic growth in 2021/22 operating profit and 24.5% growth in sales, Vallat said: "I am rather comfortable" with the sales estimate, while that for profit is "a bit cautious."

Due to higher marketing and communication spending and a tougher comparison base in the second half, full-year profits will be driven solely by first-half growth, the group said.

Group current operating profit for the six months ended Sept. 30 leapt 104.5% on an organic basis to 212.9 million euros ($238.8 million). That beat a company-compiled consensus from 22 analysts of 168.1 million euros.

Operating profit at the Remy Martin cognac division, which makes nearly 90% of group profit, totalled 188.1 million euros, up 101.9% on the same basis.

Remy had already reported a 52% organic jump in first-half sales. This reflected a strong rebound in bars and restaurants as COVID-19 restrictions eased around the world, while home consumption remained resilient. ($1 = 0.8917 euros)