By Dominique Vidalon
PARIS (Reuters) -Spirits maker Remy Cointreau slashed its sales outlook and lowered its profit guidance on Friday, as its optimism for the second half of its financial year faded amid worsening trading conditions in the United States and China.
After steep declines in sales in the first half, the maker of Remy Martin cognac and Cointreau liquors had been anticipating a rebound in the remainder of the year, led by a sharp increase in U.S. sales starting in the third quarter.
But on Friday Remy delayed that recovery until its 2024/25 fiscal year, also pointing to a slower-than-expected recovery in China, where a tough economy has dampened demand.
It now expects 2023/24 full-year organic sales to fall by 15-20%, versus its previous forecast for stable sales.
Cognac sales, which makes up a large portion of group revenues, fell 30.1% in the first half, with Remy citing a steep decline in North America where it said it faced a "fiercely promotional" environment and a rise in interest rates that had cut distributors' financing capacity.
Its full-year current operating margin would see a "contained decrease", the company said, compared with its previous expectations for a stable margin. It would achieve this via the deployment of a "major cost cutting plan".
"Remy Cointreau is determined to protect its 2023-24 profitability through tight cost controls," it said.
Sales for the first half of its fiscal year came in at 636.7 million euros ($672.7 million), marking a like-for-like fall of 22.2%, below analyst expectations for a 21.2% decline.
This reflected a normalisation of consumption in the United States, where the group is reducing inventories, while in China it saw solid growth during that mid-Autumn festival despite a slower-than-expected post-COVID recovery in demand.
Remy Cointreau's fiscal year starts on April 1 and ends on March 31.
($1 = 0.9464 euros)
(Reporting by Dominique Vidalon Additional reporting by Emma Rumney in LondonEditing by Jacqueline Wong and Mark Potter)
