French spirits group Remy Cointreau has beaten forecasts with record annual operating profits, and reiterated its pledge to overcome a tough start to its new financial year, particularly in the United States.
Chief executive Eric Vallat told analysts he was confident about a second-half rebound as the company was well placed to benefit from trends such as "premiumisation, consumers drinking less but better, and at home mixology (cocktail making)".
The maker of Remy Martin cognac and Cointreau liquor reiterated a forecast for flat organic sales in the 2023/24 financial year, with steady profitability, reflecting weaker US demand and high year-ago comparables.
"With the normalization of consumption in the United States amplified by a high basis of comparison in the first half, and our drive to reduce inventories, we expect sales and profitability to hold steady in 2023/24 on an organic basis," Vallat said in a statement.
During the COVID-19 pandemic, Remy Cointreau and rivals such as Pernod Ricard benefitted from people drinking more expensive types of alcohol at home.
There are, however, signs that spirits industry growth is slowing, notably in the United States, as positive effects from the pandemic fizzle out.
In the United States, where Remy Cointreau raised prices in April, its brands also face competition from buoyant demand for tequila, Vallat said.
Tequila is among the categories Remy Cointreau could be looking at for possible acquisitions "if prices normalise," he said.
Remy Cointreau expects group sales to decline strongly in the first half of 2023/24 due to a "very strong" fall in the US.
A steep rebound would follow in the second half in the US combined with a steep rise in China and the rest of the world, it said.
In the first quarter alone, group sales were expected to fall by some 35% on an organic basis, before sequentially improving, finance chief Luca Marotta said.
For the year ended March 31, 2023, solid demand for its premium cognac, along with cost controls, lifted operating profit by 16.2% on an organic basis to €429.6 million, beating expectations for a 14.4% rise in a company-compiled consensus of 18 analysts.
The company previously reported group sales were €1.54 billion, marking an organic rise of 10.1%.