(April -
September 2019)
Current Operating Profit showing good growth
for the Group Brands Sustained increase in strategic
investments Medium-term guidance unchanged
Regulatory News:
Over the six-month period ending September 2019, Rémy Cointreau
(Paris:RCO) generated sales of €523.9 million, virtually
stable on a reported basis (-0.6%) and down 3.6% in organic
terms (at constant exchange rates and consolidation scope).
Current Operating Profit (COP) was stable at €138.3
million: The good growth of the Group Brands’ COP
(+5.5%) was offset by a €3.3 million decrease in Partner
Brands’ COP (voluntary withdrawal from certain distribution
contracts) and the usual volatility in Holding costs (up €4.3
million).
Consequently, the current operating margin stood at 26.4%
at the end of September, up 0.2 point. While the strategy of
upscaling the Group Brands was once again reflected in a
substantial rise in gross margin (+4.0 points), this was reinvested
into strategic investments in communications (+13.3%) and into
higher Holding costs. Currency effects were favourable over the
period for €6.5 million.
Excluding non-recurring items, the Group share of net
profit came in at €84.6 million, down 5.6%.
Key figures
Millions of euros (€m)
At 30/09/19
At 30/09/18
Change:
Reported
Reported
Reported
Organic*
Sales
523.9
527.0
(0.6%)
(3.6%)
Current Operating Profit –
Group Brands
147.9
140.2
+5.5%
+0.8%
Current Operating Profit –
Group
138.3
138.2
+0.0%
(4.7%)
Current operating margin
26.4%
26.2%
+0.2 pt.
-0.3 pt.
Net profit (Group share)
90.5
87.5
+3.5%
+0.8%
Net margin (Group share)
17.3%
16.6%
+0.7 pt.
+0.7 pt.
Net profit excl. non-recurring
items
84.6
89.6
(5.6%)
(8.2%)
Net margin excl. non-recurring
items
16.2%
17.0%
-0.8 pt.
-0.8 pt.
EPS Group share (€)
1.82
1.75
+4.1%
+1.3%
EPS excluding non-recurring
items (€)
1.70
1.79
(5.0%)
(7.7%)
Net debt/EBITDA ratio
1.39
1.21
+0.18 pt.
-
Current Operating Profit by division
Millions of euros (€m)
At 30/09/19
At 30/09/18
Change:
Reported
Reported
Reported
Organic*
House of Rémy Martin
126.9
119.5
+6.2%
+0.9%
As % of sales
33.4%
33.2%
+0.2 pt.
-0.4 pt.
Liqueurs & Spirits
21.0
20.6
+1.6%
+0.3%
As % of sales
16.0%
16.9%
-0.9 pt.
-0.7 pt.
Subtotal: Group Brands
147.9
140.2
+5.5%
+0.8%
As % of sales
29.0%
29.1%
-0.1 pt.
-0.6 pt.
Partner Brands
(0.6)
2.8
(121.0%)
(119.6%)
As % of sales
-4.5%
6.1%
-
-
Holding company costs
(9.0)
(4.7)
+92.4%
+91.9%
Total
138.3
138.2
+0.0%
(4.7%)
As % of sales
26.4%
26.2%
+0.2 pt.
-0.3 pt.
The House of Rémy Martin
The House of Rémy Martin continued to grow during the
first half of the financial year (+2.1% in organic terms). Our
cognac brands enjoyed excellent momentum in China, but the fall in
tourism in Hong Kong and slower-than-anticipated stock
replenishment by US retailers mitigated the overall performance.
The Group’s global strategy of upscaling once again bore fruit over
the period, with organic growth of 2.1% breaking down into a volume
decline of 5.0% and a +7.1% benefit from price and mix.
Current Operating Profit totalled €126.9 million,
up 6.2% and the current operating margin came out at 33.4%, up 0.2
point. This modest improvement reflected a significant increase in
communication investments (+9.8%) ahead of the launch of the Rémy
Martin brand’s new global communication campaign, “Team up for
excellence.”
Liqueurs & Spirits
The Liqueurs & Spirits division experienced strong
growth in the first half (+4.9% organic), driven by the majority of
its brands and in particular by the House of Cointreau, whose “The
Art of the Mix” campaign continued to prove a success in the United
States.
Current Operating Profit totalled €21.0 million,
up 1.6%. The substantial increase in communication investments
(+18.3%), focused on strengthening awareness and accelerating the
internationalization of the division’s brands, translated into a
0.9-point contraction in current operating margin, which came out
at 16.0% for the period.
Partner Brands
The fall in the sales of Partner Brands has accelerated this
year (-71.4% in organic terms), with the termination of sizable
distribution contracts in the Czech Republic, Slovakia and the
United States. Adjusted for the termination of these contracts, the
sales of Partner Brands were down 2.8% in organic terms, the result
of persistent weakness in Belgium.
Thus, Current Operating Profit was a €0.6 million
loss compared with a gain of €2.8 million at 30 September
2018.
Consolidated results
Current Operating Profit (COP) totalled €138.3 million,
stable on a reported basis and down 4.7% in organic terms. The
good performance of the Group Brands’ Current Operating
Profit, up 5.5% to €147.9 million (+0.8% in organic terms) was
offset by the termination of some Partner Brands’ distribution
contracts and the increase in holding costs. The latter resulted
from the non-recurrence of a provision reversal that reduced
holding costs in the first-half 2018/19 and from costs related to
organisational changes announced recently.
COP benefited from favourable currency effects over the period,
for €6.5 million. The average EUR/USD exchange rate improved
(1.12 compared with 1.18 at 30 September 2018), while the average
collection rate (linked to the Group’s hedging policy) came out at
1.16 for the period, compared with 1.19 at 30 September 2018.
Consequently, the current operating margin rose 0.2
point to 26.4% over the first half (down 0.3 point on an
organic basis).
Operating profit totalled €137.7 million after
taking into account a net operating expense of €0.6 million.
Net financial expenses amounted to €14.4 million
over the period, down €2.3 million. This resulted from a decrease
in the cost of gross financial debt and the non-recurrence of a
€5.2 million expense related to the early repayment of the vendor
loan by the EPI Group in the first-half 2018/19. In contrast, net
currency losses (unrealized foreign exchange gains/losses) amounted
to €2.4 million compared with a gain of €0.6 million at 30
September 2018.
The tax expense totalled €39.1 million, for an
effective tax rate of 31.7% (similar rate excluding non-recurring
items), higher than the rate in September 2018 (29.2% on a reported
basis and 29.3% excluding non-recurring items) due to the
geographical spread of profits.
After taking into account the net proceeds from the disposal of
the subsidiaries in the Czech Republic and Slovakia (€6.3 million),
the Group share of net profit amounted to €90.5
million, up 3.5%. The Group’s net margin thus stands at 17.3%
(up 0.7 point).
Excluding non-recurring items, the Group share of net
profit amounted to €84.6 million, down 5.6% and net
margin was 16.2% (down 0.8 point).
Excluding non-recurring items, net earnings per share
were €1.70 (down 5.0%).
Net debt totalled €458.9 million (owing to a
seasonal peak in the working capital requirement), an increase of
€115.6 million on March 2019 and €127.2 million on September 2018.
This was mainly the result of an increase in cash outflows linked
to dividend payments. An exceptional dividend of €1.00 was
attributed to shareholders at the Annual General Meeting in July
2019 (in addition to the regular dividend of €1.65) and all the
payments were made in cash this year, while 89% of the rights were
exercised in favour of a payment in shares in the year-ago
period.
As a result, the net debt to EBITDA ratio came out at
1.39, compared with 1.21 at the end of September 2018.
Post-closing events
On 26 November 2019, as previously announced, the Board
of Directors appointed Eric Vallat as Chief Executive Officer of
the Rémy Cointreau Group, effective from 1 December 2019, for a
period of 3 years.
Outlook for the year and medium
term
For the fiscal year 2019/20, against the backdrop of H1 earnings
and an uncertain geopolitical environment, Rémy Cointreau
expects slight organic growth in COP for the Group Brands and
stable COP for the Group. As a reminder, the year includes the
termination of distribution contracts for Partner Brands (in the
Czech Republic, Slovakia and United States), which are estimated to
have an overall impact of €56 million on sales and €5 million on
COP.
The Group’s medium-term guidance remains unchanged: Rémy
Cointreau reiterates its ambition to become the world leader in
exceptional spirits. This will result in 60 to 65% of its turnover
being generated by exceptional spirits (retail sales price over
USD50). The Group also expects its current operating margin to
continue to benefit from its value strategy, including significant
investments behind its brands and its distribution network. Rémy
Cointreau’s objective is thus to build an ever more sustainable,
resilient and profitable business model.
APPENDICES
Sales and Current Operating Profit by division
Millions of euros (€m)
At 30/09/19
At 30/09/18
Change:
Reported
Organic*
Reported
Reported
Organic*
A
B
C
A/C-1
B/C-1
Sales
House of Rémy Martin
379.6
367.2
359.6
5.6%
2.1%
Liqueurs & Spirits
131.2
128.0
121.9
7.6%
4.9%
Subtotal: Group Brands
510.8
495.1
481.5
6.1%
2.8%
Partner Brands
13.1
13.0
45.5
(71.2%)
(71.4%)
Total
523.9
508.1
527.0
(0.6%)
(3.6%)
Current Operating
Profit
House of Rémy Martin
126.9
120.6
119.5
+6.2%
+0.9%
As % of sales
33.4%
32.8%
33.2%
+0.2 pt.
-0.4 pt.
Liqueurs & Spirits
21.0
20.7
20.6
+1.6%
+0.3%
As % of sales
16.0%
16.2%
16.9%
-0.9 pt.
-0.7 pt.
Subtotal: Group Brands
147.9
141.3
140.2
+5.5%
+0.8%
As % of sales
29.0%
28.5%
29.1%
-0.1 pt.
-0.6 pt.
Partner Brands
(0.6)
(0.6)
2.8
(121.0%)
(119.6%)
As % of sales
-4.5%
-4.2%
6.1%
-
-
Holding company costs
(9.0)
(9.0)
(4.7)
+92.4%
+91.9%
Total
138.3
131.7
138.2
+0.0%
(4.7%)
As % of sales
26.4%
25.9%
26.2%
+0.2 pt.
-0.3 pt.
Summary profit and loss account
Millions of euros (€m)
At 30/09/19
At 30/09/18
Change:
Reported
Organic*
Reported
Reported
Organic*
A
B
C
A/C-1
B/C-1
Sales
523.9
508.1
527.0
-0.6%
-3.6%
Gross margin
348.3
337.4
329.1
+5.8%
+2.5%
Gross profit margin
66.5%
66.4%
62.5%
+4.0 pts.
+3.9 pts.
Current Operating
Profit
138.3
131.7
138.2
+0.0%
(4.7%)
Current operating margin (as %
sales)
26.4%
25.9%
26.2%
+0.2 pt.
-0.3 pt.
Other operating income and
expenses
(0.6)
(0.6)
2.0
-
-
Operating profit
137.7
131.1
140.3
(1.8%)
(6.5%)
Financial result
(14.4)
(11.3)
(16.7)
(13.8%)
(32.3%)
Income tax
(39.1)
(38.0)
(36.1)
+8.3%
+5.3%
Tax rate
31.7%
31.7%
29.2%
+2.5 pts.
+2.5 pts.
Share in profit (loss) of
associates/minority interests
0.0
0.0
0.0
-
-
Net profit after taxes of
discontinued operations
6.3
6.3
0.0
-
-
Net profit Group share
90.5
88.1
87.5
+3.5%
+0.8%
Net profit excluding
non-recurring items
84.6
82.2
89.6
(5.6%)
(8.2%)
Net profit (excluding
non-recurring items) as % of sales
16.2%
16.2%
17.0%
-0.8 pt.
-0.8 pt.
Group earnings per share (€)
1.82
1.77
1.75
+4.1%
+1.3%
Earnings per share excluding
non-recurring items (€)
1.70
1.65
1.79
(5.0%)
(7.7%)
Reconciliation between net profit
and net profit excluding non-recurring items
Millions of euros (€m)
At 30/09/19
At 30/09/18
Group share of net profit
90.5
87.5
Other operating income and expenses
0.6
(2.0)
Expense on vendor loan (finance costs)
-
5.2
Tax on “Other operating income and
expenses” and associated with expense on vendor loan
(0.2)
(1.1)
Net profit after taxes of discontinued
operations
(6.3)
-
Net profit excluding non-recurring
items attributable to the Group
84.6
89.6
Definitions of alternative performance
indicators
Rémy Cointreau’s management process is based on the following
alternative performance indicators, selected for planning and
reporting purposes. The Group’s management considers that these
indicators provide users of the financial statements with useful
additional information for understanding the Group’s performance.
These alternative performance indicators should be considered as
supplementing those included in the consolidated financial
statements and the resulting movements.
Organic growth in sales and Current Operating Profit
Organic growth is calculated excluding the impact of exchange rate
fluctuations, acquisitions and disposals. This indicator serves to
focus on Group performance across both financial years, which local
management is more directly capable of influencing.
The impact of exchange rates is calculated by converting sales
and Current Operating Profit for the current financial year using
average exchange rates (or, for COP, the hedged exchange rate) from
the previous financial year.
For acquisitions in the current financial year, sales and
Current Operating Profit of acquired entities are not included in
organic growth calculations. For acquisitions in the previous
financial year, sales and Current Operating Profit of acquired
entities are included in the previous financial year; however, they
are only included in current year organic growth calculations with
effect from the anniversary date of the acquisition.
For significant disposals, data is post-application of IFRS 5,
under which results of entities disposed of are systematically
reclassified under “Net earnings from discontinued operations”.
Indicators “excluding non-recurring items” The two items
set out below constitute key indicators for measuring recurring
business performance, since they exclude significant items which,
by virtue of their unusual nature, cannot be considered inherent to
the Group’s ongoing performance:
- Recurring operating profit
corresponds to operating profit before other non-recurring
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 deconsolidated and discontinued activities and the
contribution upon distribution of the dividend in cash.
Gross operating profit (EBITDA) This measure, which is
used in particular to calculate certain ratios, equates to Current
Operating Profit less amortisation and depreciation expenses on
intangible assets and property, plant and equipment for the period,
expenses arising from stock option plans, and dividends received
from affiliates during the period.
Net debt Net financial debt as defined and used by the
Group corresponds to the sum of long- and 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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191127005436/en/
Laetitia Delaye — +33 (0)7 87 25 36 01
Remy Cointreau (EU:RCO)
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