Rémy Cointreau: Full-year Sales 2020/21

Regulatory News:

Rémy Cointreau (Paris:RCO) posted sales of €1,010.2 million in full year 2020/21, up +1.8% on an organic basis (assuming constant exchange rates and consolidation scope). Reported sales were down -1.4%, including unfavorable currency impacts (-3.5%) and a positive scope effect linked to the acquisition of J.R. Brillet and J. de Telmont (+0.3%).

This performance demonstrates the Group’s resilience amid the COVID-19 pandemic. After declining in the first half of the year, business bounced back strongly in the second half, including +15.1% organic growth in the fourth quarter.

Sales of Cognac were up +3.7%* in the full year, thanks to continued excellent momentum in consumption in the United States and mainland China in the fourth quarter (+18.2%*). The good performance in the Liqueurs & Spirits division in the fourth quarter (+7.1%*) confirmed the recovery that began the previous quarter, though the division posted a -3.2%* decline over the full year.

The Americas region posted full-year growth of +18.6%*, buoyed by excellent performance in the United States. The trend in the Asia-Pacific region (-4.5%*) masked strong double-digit growth in mainland China and Australia. The Europe, Middle East & Africa region posted a -21.7%* decline, hampered by public health restrictions, in particular the closure of the on-trade channel. The United Kingdom, Benelux, Switzerland and Eastern Europe nevertheless showed strong momentum, helped by buoyant at-home consumption.

Breakdown of sales by division:

Cognac

Sales in the Cognac division grew +3.7%* in full year 2020/21, quickening significantly in the second half (+27.0%*), buoyed by the United States and mainland China. Sales were up +18.2%* in the fourth quarter thanks to excellent performance during the Chinese New Year in the Asia-Pacific region and continued strong momentum in the United States, albeit moderated by the Group’s decision to manage its strategic inventory. Although their decline slowed in the second half of the year, the duty-free market and the on-trade channel continued to penalize Southeast Asia, Africa and Latin America.

Against the backdrop of the pandemic, the House of Rémy Martin continued with creative initiatives to stay in touch with its clients: in the United States, the Rémy Martin brand used its "Stay at home with Rémy Martin” digital campaign and its "Rémy Martin x Chef Kwame” recipe videos to support buoyant at-home consumption. Thanks to its long-time ties with the music world, the brand also enjoyed a high level of media exposure when its "Ground’s Melody” video featuring rapper 6LACK was shown at the Grammy Awards. In mainland China, the opening of a temporary "House of Rémy Martin” in Guangzhou proved a big hit during the Chinese New Year festivities. In accordance with its direct-to-consumer strategy, LOUIS XIII opened two new stores in mainland China – in Shenzhen and Hangzhou – and launched two e-boutiques, one in the United Kingdom in April 2020 and the other in the United States in February 2021.

Liqueurs & Spirits

Despite a sharp upturn in the second half of the year (+7.2%*), sales of Liqueurs & Spirits declined slightly over the full year (-3.2%*).

The House of Cointreau delivered strong sales growth over the full year, buoyed by double-digit growth in the United States, the United Kingdom, Benelux and Australia, where the closure of the on-trade channel led to rapid growth in at-home mixology. The brand also reaped the benefits of its communications strategy centred around the Margarita. Lastly, it demonstrated its support for the hospitality industry in a number of markets, particularly in the United States with its "Love Letter” initiative, that featured a 30-second commercial during the Super Bowl, encouraging US consumers to support their favourite bars and restaurants.

The Whisky business also posted strong full-year growth thanks to solid momentum in most of its key markets, particularly in Asia during the Chinese New Year.

The rest of the portfolio was hampered by weakness in the EMEA region (due to the closure of the on-trade channel) and the duty-free market.

Partner Brands

Partner Brand sales declined slightly over the full year (-1.5%*), though they did return to growth in the fourth quarter.

Outlook

In a still uncertain public health, economic and geopolitical environment, the Rémy Cointreau Group remains confident of its ability to emerge stronger from the crisis.

With full-year sales slightly ahead of its expectations, Rémy Cointreau now anticipates its Current Operating Profit to grow around +10%, in organic terms, in financial year 2020/21.

This performance will be tempered by an adverse foreign exchange effect, now estimated at - €5,0 million. The forecast scope effect is unchanged (- € 2.0 million).

The Group is expecting a strong start to financial year 2021/22 supported by a very favourable base of comparison, shipment phasing benefits, and structurally more buoyant consumer trends in the United States.

Sales and organic growth by division

First quarter 2020/21 sales (April-June 2020)

Second quarter 2020-21 sales (July-September 2020)

First half 2020-21 sales (April-September 2020)

Third quarter 2020-21 sales (September-December 2020)

9-month sales 2020-21 (April-December 2020)

Fourth quarter 2020-2021 sales (January-March 2021)

Second half 2020-2021 sales (October 2020 – March 2021)

Full year 2020-2021 sales (April 2020 – March 2021)

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 to help them understand 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 sales growth

Organic (i.e. like-for-like) growth is calculated excluding the impact of exchange rate fluctuations, acquisitions and disposals.

The impact of exchange rates is calculated by converting sales in the current financial year using average exchange rates from the previous financial year.

For acquisitions in the current financial year, sales of acquired entities are not included in organic growth calculations. For acquisitions in the previous financial year, sales of acquired entities are included in the previous financial year but are only included in organic growth calculations for the current year with effect from the anniversary date of the acquisition.

For significant disposals, data is post-application of IFRS 5 (under which sales of entities disposed of are systematically reclassified under "Net earnings from discontinued operations” for the current and previous financial years).

This indicator serves to focus on Group performance across both financial years, which local management is more directly capable of influencing.

(*) Organic growth is calculated assuming constant exchange rates and consolidation scope.

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