Buoyant growth in Current Operating Profit
(up 10.1%*)2018/19 full-year guidance confirmed
Regulatory News:
Over the six-month period ending September 2018, Rémy
Cointreau (Paris:RCO) generated sales of €571.4 million (pro
forma pre-IFRS 15, 16 and 9), equating to reported growth of
5.0% and organic growth (at constant exchange rates and
consolidation scope) of 7.7%.
Current Operating Profit (COP pro forma) came in at
€138.0 million, up 2.9% on a reported basis. In organic terms,
COP was up 10.1%, thanks to a significant rise in the gross
margin (up 0.9 point), buoyed by our exceptional spirits’ momentum
(> US$50) and strict overhead control. These effects
comfortably offset significantly higher investment in communication
(up 9.5%) and continued efforts to strengthen distribution
structures. As such, the current operating margin (pro forma)
reached 24.1%, up 0.6 point on an organic basis. The
margin declined 0.5 point on a reported basis, after taking into
account adverse currency effects.
Excluding non-recurring items, the Group share of net profit
(pro forma) was €87.5 million, down 3.1% on a
reported basis but up 7.2% in organic terms.
Key figures
Pro forma pre-IFRS 15, 16 &
9
Post-IFRS 15, 16 & 9
Millions of euros (€m)
To 30/09/18 To 30/09/17
Change To 30/09/18
Reported Reported Reported Organic*
Reported Net sales
571.4 544.4 +5.0%
+7.7% 527.0
Current Operating Profit 138.0 134.1
+2.9% +10.1% 138.2 Current operating margin
24.1% 24.6% -0.5 pt +0.6 pt 26.2% Net profit (Group share)
85.4 89.2 (4.3%) +6.2% 87.5 Net margin (Group share)
14.9% 16.4% -1.5 pts -0.2 pt 16.6%
Net profit excl.
non-recurring items 87.5 90.3
(3.1%) +7.2%
89.6 Net margin excl. non-recurring items 15.3% 16.6% -1.3
pts -0.1 pt 17.0% EPS Group share (€)
1.70 1.80 (5.2%) +5.1%
1.75
EPS excluding non-recurring items (€) 1.75 1.82
(4.0%) +6.2% 1.79 Net debt / EBITDA
ratio
1.17 1.66 -0.49 pt -
1.21
Current Operating Profit by division
Pro forma pre-IFRS 15, 16 &
9 Post-IFRS 15, 16 & 9
Millions of euros (€m)
To 30/09/18 To 30/09/17
Change To 30/09/18
Reported Reported Reported Organic*
Reported House of Rémy Martin
119.5 115.5
+3.5% +11.3% 119.5 As % of sales
30.0% 31.5% -1.5 pts
-0.2 pts 33.2% Liqueurs & Spirits
20.6 22.5 (8.2%)
(6.0%) 20.6 As % of sales
16.2% 17.4% -1.2 pts -1.2 pts
16.9%
Subtotal: Group brands 140.2 138.0
+1.6%
+8.5% 140.2 As % of sales
26.7% 27.8% -1.1 pts -0.1
pts 29.1% Partner Brands
2.8 2.5 +10.8% +14.4% 2.8 As
% of sales
6.0% 5.2% +0.8 pts
+1.0 pts 6.1% Holding company costs
(5.0) (6.4) (22.5%) (23.3%)
(4.7)
Total 138.0 134.1 +2.9%
+10.1% 138.2 As % of sales
24.1% 24.6%
-0.5 pts +0.6 pts
26.2%
House of Rémy Martin
The House of Rémy Martin posted strong sales growth in
the half-year (up 11.7%*), thanks to continuing robust trends in
the Asia-Pacific region, notably in Greater China, Singapore,
Australia, Japan and Travel Retail Asia. The Americas region
continued to benefit from buoyant trends in high-end cognac and the
success of the limited edition VSOP with Matt W. Moore. Key
markets in the EMEA region (Russia, the United Kingdom, Switzerland
and India) also posted growth. The Group’s global strategy of
moving its ranges upmarket once again bore fruit over the period,
with organic growth of 11.7%, broken down into a volume growth of
6.4% and a 5.3% contribution from mix and price effects.
Current Operating Profit came in at
€119.5 million, up 11.3% in organic terms, while the
current operating margin stood at 30.0%, a slight organic decline
of 0.2 point. This was driven by significantly higher investment in
communication (up 12.5%*) and continued efforts to strengthen
distribution structures over the period. These higher costs offset
price and mix effects that were very positive for the gross margin
(up double digits in organic terms).
Liqueurs & Spirits
The Liqueurs & Spirits division posted modest
growth in the early part of the year (up 0.8%*) but should pick up
in the second half, supported by a number of communication
campaigns.
During the first half, the House of Cointreau rolled out
its new “The Art of the Mix” campaign and marketing activities in
connection with the 70th anniversary of the invention of the
Margarita. As such, sales of the brand should pick up over the
final part of the year. Meanwhile, the House of Metaxa
launched the second opus of its “Don’t Drink It, Explore It”
campaign and celebrated 130 years of the brand in Greece with the
limited edition AEN Cask No. 2 (AEN means “forever” in Greek)
this summer. The upscaling strategies at Mount Gay and
St-Rémy resulted in a further decline in volume but strong
growth in value per case. The Botanist gin continued to grow
strongly across all geographical regions, while remarkable growth
in the Whisky business was mainly driven by single malt
Scotch brands and the launch of the new Port Charlotte
bottle.
Current Operating Profit came in at
€20.6 million, down 6.0% in organic terms. This trend was
due to much higher investment in communication and distribution
structures, while the gross margin proved resilient. The current
operating margin came in at 16.2% in the six-month period, down 1.2
points organically.
Partner Brands
Sales declined 4.5%* over the period, due to the termination of
new distribution contracts with third-party brands. However,
second-quarter performance was boosted by a successful, one-off
promotional campaign in the United States.
Current Operating Profit came in at
€2.8 million, up 14.4% in organic terms.
Consolidated results
Current Operating Profit (pro forma) came in at
€138.0 million, up 2.9% on a reported basis and 10.1%
in organic terms.
Current Operating Profit was penalised by adverse currency
effects costing €9.6 million over the half-year: the average
EUR/USD conversion rate deteriorated over the period (coming out at
1.18, compared with 1.14 for the period
ending September 2017), while the average collection rate
(linked to the Group’s hedging policy) came out at 1.19, compared
with 1.16 for the year-ago period.
Consequently, the current operating margin fell 0.5
point to 24.1% over the first half (up 0.6 point in organic
terms).
Operating profit (pro forma) was
€140.0 million, after taking into account a net
operating income of €2.0 million, which was mainly linked to
disposals of non-core real estate assets.
Net financial income/expense (pro forma) showed a net
expense of €19.6 million over the period. The year-on-year
increase was mainly driven by two factors: a non-recurring cost of
€5.2 million linked to early repayment of the vendor loan by
the EPI Group (equating to the difference between the balance sheet
value of the loan and the repayment amount) and an unrealised
foreign exchange loss of €2.8 million (valuation of the
portfolio of hedging instruments).
The cost of gross financial debt fell slightly because of lower
average debt over the period.
The tax expense (pro forma) totalled €35.0 million
(stable year-on-year), giving an effective tax rate of 29.0% (29.1%
excluding non-recurring items). This represents an increase
compared with the period ended 30 September 2017 (27.9% on a
reported basis and 27.8% excluding non-recurring items) due to the
geographical spread of profits.
Consequently, the Group share of net profit (pro forma)
was down 4.3% on a reported basis at €85.4 million.
Excluding non-recurring items, the Group share of net
profit (pro forma) came in at €87.5 million, down
3.1% (but up 7.2% organically).
Excluding non-recurring items, net earnings per share
(pro forma) came in at €1.75 (down 4.0% on a reported basis
but up 6.2% in organic terms).
Net debt (pro forma pre-IFRS 16) stood at
€303.9 million, up €21.1 million from March 2018
(due to a seasonal peak in working capital) but down
€126.7 million relative to September 2017. This was
mainly due to lower outgoings linked to dividend payments (with
most shareholders opting to take payment in shares) and the early
repayment of the vendor loan by the EPI Group.
Consequently, the net debt to EBITDA ratio (pro forma)
further improved to 1.17 (1.21 post-IFRS 15, 16 and 9),
compared with 1.66 for the period ended September 2017.
Recent financial events
On 24 July 2018, at the general meeting, the
shareholders voted to approve payment of an ordinary dividend of
€1.65 per share in respect to the 2017/18 financial year, with the
option for shareholders to take payment entirely in shares.
Eighty-nine percent of votes cast were in favour of payment in
shares.
On 1 August 2018, a share buyback program was
launched, covering a maximum of 1 million shares. This program
will expire no later than 30 April 2019.
2018/19 outlook
At the end of this first half, Rémy Cointreau confirms its
guidance of growth in Current Operating Profit over the
2018/19 financial year, assuming constant exchange rates and
consolidation scope (on a pro forma, pre-IFRS 15, 16 and 9
basis).
APPENDICES
Sales and Current Operating Profit by
division
Pro forma pre-IFRS 15, 16 & 9
Post-IFRS 15, 16 & 9 Millions of euros (€m)
To 30/09/18 To 30/09/17 Change To
30/09/18 Reported Organic* Reported Reported Organic*
Reported A B C A/C-1
B/C-1
Net Sales
House of Rémy Martin 398.0 410.0 367.0 8.5%
11.7% 359.6 Liqueurs & Spirits 127.1 130.2 129.2 (1.6%) 0.8%
121.9 Subtotal: Group brands 525.1 540.1 496.1 5.8% 8.9% 481.5
Partner Brands 46.3 46.1 48.2 (4.0%) (4.5%) 45.5
Total 571.4 586.2
544.4 5.0% 7.7%
527.0 Current Operating Profit
House of
Rémy Martin 119.5 128.5 115.5 3.5% 11.3% 119.5 As % of sales 30.0%
31.3% 31.5% -1.5 pts -0.2 pt 33.2% Liqueurs & Spirits 20.6 21.2
22.5 (8.2%) (6.0%) 20.6 As % of sales 16.2% 16.2% 17.4% -1.2 pts
-1.2 pts 16.9% Subtotal: Group brands 140.2 149.7 138.0 1.6% 8.5%
140.2 As % of sales 26.7% 27.7% 27.8% -1.1 pts -0.1 pt 29.1%
Partner Brands 2.8 2.9 2.5 10.8% 14.4% 2.8 As % of sales
6.0% 6.2% 5.2% +0.8 pt +1.0 pt
6.1% Holding company costs (5.0)
(5.0) (6.4) (22.5%) (23.3%) (4.7)
Total 138.0 147.6 134.1
2.9% 10.1% 138.2 As % of sales
24.1% 25.2% 24.6% -0.5 pt +0.6 pt
26.2%
Summary profit and loss account
Pro forma pre-IFRS 15, 16 & 9
Post-IFRS 15, 16 & 9 Millions of euros (€m)
To 30/09/18 To 30/09/17 Change Reported
Organic* Reported Reported Organic* Reported
A B C A/C-1 B/C-1
Net sales 571.4 586.2 544.4 +5.0% +7.7% 527.0 Gross
margin 385.3 399.1 365.8 +5.3% +9.1% 329.1 Gross profit as % of
sales 67.4% 68.1% 67.2% +0.2 pt +0.9 pt 62.5%
Current Operating
Profit 138.0 147.6 134.1 +2.9%
+10.1% 138.2 Current operating profit as % of
sales 24.1% 25.2% 24.6% -0.5 pt
+0.6 pt 26.2% Other operating income and expenses 2.0
2.0 (1.8) - - 2.0
Operating profit 140.0 149.6
132.3 +5.8% +13.1% 140.3 Net financial
income (expense) (19.6) (16.1) (8.8) +123.8% +83.9% (16.7) Income
tax (35.0) (38.8) (34.5) +1.4% +12.5% (36.1) Tax rate 29.0% 29.0%
27.9% - - 29.2% Share in profit (loss) of associates 0.0 0.0 0.2 -
- 0.0 Minority interests (0.0) (0.0) (0.1) - - (0.0) Net profit
(Group share) 85.4 94.7 89.2 (4.3%) +6.2% 87.5
Net profit
excluding non-recurring items 87.5 96.8
90.3 (3.1%) +7.2% 89.6 Net profit
(excluding non-recurring items) as % of sales 15.3%
16.5% 16.6% -1.3 pts -0.1 pt
17.0% Earnings per share – Group share (€) 1.70 1.89 1.80
(5.2%) +5.1% 1.75 Earnings per share excluding non-recurring
items (€)
1.75 1.93 1.82
(4.0%) +6.2% 1.79
Reconciliation between net profit and net
profit excluding non-recurring items
Pro forma pre-IFRS 15, 16 & 9
Post-IFRS 15, 16 & 9 Millions of euros (€m)
To 30/09/18 To 30/09/17 To 30/09/18
Net profit (Group share) 85.4
89.2 87.5 Provision for reorganisation of
distribution network (0.0) 1.9 (0.0) Disposals of non-core assets
(2.1) 0.0 (2.1) Expense on vendor loan (finance costs) 5.2 0.0 5.2
Tax on “Other operating income and expenses” and associated with
expense on vendor loan (1.1) (0.3) (1.1) Other 0.1 (0.4) 0.1
Net profit excluding non-recurring items (Group share)
87.5 90.3 89.6
IFRS 15, 16 & 9: Impact on the profit
and loss account
Pro forma pre-IFRS 15, 16 & 9
Impact Post-IFRS 15, 16 &9 Millions of
euros (€m) To 30/09/18 IFRS 15 IFRS 16
IFRS 9 To 30/09/18
Net sales
571.4 (44.4) - -
527.0 Cost of goods sold (186.0) (11.8) - - (197.8)
Gross margin 385.3
(56.2) - -
329.1 Selling expenses (204.0) 56.2 - - (147.9)
Administrative expenses (43.3) - 0.3 - (43.0)
Current Operating
Profit 138.0 - 0.3 - 138.2
Other operating income and expenses 2.0 - - - 2.0
Operating
profit 140.0 - 0.3 - 140.3
Cost of net financial debt (6.7) - (0.5) - (7.2) Other financial
income and expenses (12.9) - - 3.4 (9.5)
Net financial income
(expense) (19.6) - (0.5) 3.4
(16.7) Profit before tax 120.4 - (0.2) 3.4 123.6
Income
tax (35.0) - 0.1 (1.2)
(36.1) Net profit from continuing operations 85.4 - (0.2)
2.2 87.5 Net profit 85.4 - (0.2) 2.2 87.5
Net profit excluding
non-recurring items 87.5 - (0.2)
2.2 89.6 Net debt/EBITDA 1.17 -
0.04 - 1.21
Definitions of alternative performance
measures
Rémy Cointreau's management process is based on the following
alternative performance measures, chosen for scheduling and
reporting. The Group's management believes that these measures
provide useful additional information for users of financial
statements to understand the Group's performance. These alternative
performance measures must be considered complementary to those
shown in the consolidated financial statements and the transactions
resulting from them.
With effect from 1 April 2018, the Rémy Cointreau
group applies IFRS 15, “Revenue from Contracts with
Customers”, IFRS 16, “Leases” and IFRS 9, “Financial
instruments”. As a result of the transitional arrangements
chosen by the Group, the comparison period (ended
30 September 2017) has not been restated. As such, the
change between the two reported periods is not relevant.
To make performance easier to analyse, particularly as regards
to sales and current operating profit, organic growth is
calculated based on data prior to application of these standards
(i.e. pro forma) and assuming constant exchange rates and
consolidation scope.
Organic growth in sales and in Current Operating Profit
(COP)
Organic growth is calculated by excluding the impacts of
exchange rate fluctuations in addition to acquisitions and
disposals. This measure emphasizes the Group's performance over the
two financial years, a performance that local management is able to
influence more directly.
The impact of exchange rates is calculated by converting the
sales and the Current Operating Profit for the current financial
year into average exchange rates (or into the hedged exchange rate
for the Current Operating Profit) for the previous financial
year.
For the current financial year's acquisitions, the sales and the
Current Operating Profit of the acquired entity are excluded from
the organic growth calculations. For the previous financial year's
acquisitions, the sales and Current Operating Profit of the
acquired entity are included in the previous financial year, but
are only included in the calculation of the organic growth over the
current financial year from the anniversary date of
acquisition.
In the event of a major disposal, the data is used after
applying IFRS 5 (which systematically reclassifies the assigned
entity's results as "net profit from discontinued operations" for
the current financial year and the previous financial year).
The "excluding non-recurring items" measures
The 2 measures referred to below correspond to key indicators
for measuring recurring business performance, by excluding
significant items which, due to their nature and non-habitual
character, cannot be considered as inherent to the Group's current
performance:
- Current Operating Profit:
Current Operating Profit corresponds to the operating profit before
other non-current operating income and expenses.
- Net profit (Group share), excluding
non-recurring items: Current net profit (Group share)
corresponds to the net profit (Group share) adjusted for other
non-current operating income and expenses, associated tax effects,
profit from discontinued operations and taxes on the payment of
cash dividends.
Gross operating profit (EBITDA)
This aggregate amount, which is used particularly in the
calculation of certain ratios, is the sum of the current operating
profit, the amortization expense for intangible and tangible fixed
assets for the period, the expense associated with share option
plans and dividends paid during the period by associates.
Net debt
Net finance costs as defined and used by the Group correspond to
the sum of the long-term financial debt, short-term financial debt
and accrued interest, less cash and cash equivalents.
Regulated information in connection with this press release can
be found at www.remy-cointreau.com
(*) Organic growth is calculated assuming constant exchange
rates and consolidation scope (pro forma pre-IFRS 15, 16 &
9)
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version on businesswire.com: https://www.businesswire.com/news/home/20181121005532/en/
Laetitia Delaye+33 7 87 25 36 01
Remy Cointreau (EU:RCO)
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