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Shift to premium spirits helps Remy weather China lockdowns

Shift to premium spirits helps Remy weather China lockdowns

  • 2021/22 current operating profit up 39.9% vs forecast 38.6%
  • Expects another year of strong growth in 2022/23
  • Still eyes double-digit organic sales growth in Q1 – CEO

PARIS, June 2 (Reuters) – France’s Remy Cointreau (RCOP.PA) on Thursday predicted a strong start to its new financial year, as broad demand for its premium spirits helps to offset inflationary pressures and the impact of COVID lockdowns in China.The maker of Remy Martin cognac and Cointreau liquor made the upbeat comments after reporting higher-than-expected operating profit growth for its financial year ended March 31.”On the strength of our progress against our strategic goals, new consumption trends and our robust pricing power, we are starting the year 2022-23 with confidence,” Chief Executive Officer Eric Vallat said in a statement.Register now for FREE unlimited access to Reuters.comRegisterThe pandemic has helped Remy’s long-term drive towards higher-priced spirits to boost profit margins, accelerating a shift towards premium drinks, at-home consumption, cocktails and e-commerce.Vallat told journalists that for the new fiscal year, Remy expected “solid profitable growth” as price increases and cost control would help mitigate inflationary pressures.In the short term, Vallat said: “I can confirm we are expecting double-digit organic sales growth in the first quarter despite the lockdown in China and high comparables.”With China accounting for 15-20% of group sales, growth would be led by demand from other regions, notably the United States.Strong demand for its premium cognac in China and the United States, along with tight cost management, lifted the company’s 2021/22 organic operating profit by 39.9% to 334.4 million euros ($356.3 million), beating the 38.6% forecast by analysts.Reflecting its confidence, Remy said it would pay shareholders an ordinary dividend of 1.85 euros per share in cash and an exceptional dividend of 1 euro.”Remy guides to another year of strong growth and margin improvement, led by its strong pricing power, which suggests upside to consensus organic EBIT of +10%,” Credit Suisse analysts said in a note.Remy Cointreau shares jumped more than 3% in early trade, before handing back some gains.The company reiterated its 2030 goals for a gross margin of 72% and an operating margin of 33%. That compares with the 68.6% and 25.5% achieved respectively in 2021/22.($1 = 0.9385 euros)Register now for FREE unlimited access to Reuters.comRegisterReporting by Dominique Vidalon Editing by Sherry Jacob-Phillips and Mark PotterOur Standards: The Thomson Reuters Trust Principles. .

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Swedish Match top 10 investor says Philip Morris bid a ‘healthy premium’

Swedish Match top 10 investor says Philip Morris bid a ‘healthy premium’

Moist powder tobacco “snus” cans are seen on shelves at a Swedish Match store in Stockholm, Sweden October 24, 2018. Picture taken October 24, 2018. REUTERS/Anna Ringstrom/File PhotoRegister now for FREE unlimited access to Reuters.comRegisterLONDON, May 12 (Reuters) – Philip Morris’ $16 billion offer for Stockholm-based Swedish Match (SWMA.ST) represents a “healthy premium” and the Marlboro maker could yet go higher, Swedish Match’s No. 10 shareholder GACMO Investors (GBL.N) said on Thursday.Marlboro maker Philip Morris agreed on Wednesday to buy Swedish Match, one of the world’s biggest makers of oral nicotine products. These include Snus – a sucked tobacco product the firm says is less harmful than smoking – as well as Zyn nicotine pouches, which are used the same way and tobacco-free.Kevin Dreyer, co-chief investment officer, value, at GAMCO identified Japan Tobacco Inc (2914.T) (JTI) as a possible rival bidder but said it would be hard-pressed to hijack the deal. GAMCO, formerly known as Gabelli Asset Management Company, owns just over 2% of Swedish Match, according to Refinitiv.Register now for FREE unlimited access to Reuters.comRegister“PMI has very deep pockets and will be a tough company to out-bid,” he said. “This deal is really the culmination of the last five-to-seven years of work Swedish Match has done in developing Zyn into the leading brand, and having that advantageous market share – it’s an attractive stock.”Philip Morris declined to comment. Swedish Match and JTI did not immediately respond to a request for comment.Philip Morris needs at least 90% of shareholders to approve the deal for it to succeed. Some other shareholders have questioned whether the Philip Morris offer represents good value. Swedish Match shareholder Bronte Capital said on Wednesday the price Philip Morris agreed to pay was “unacceptable”.Register now for FREE unlimited access to Reuters.comRegisterReporting by Richa Naidu; editing by David Evans and Emelia Sithole-MatariseOur Standards: The Thomson Reuters Trust Principles. .