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Investing.com — Rémy Cointreau (EPA:RCOP) stock fell in early trading on Thursday after the French spirits giant said it expects growth to slow in the second half of its fiscal year.
CEO Eric Vallat said the six months through March will likely show a “return to normal consumption in the post-covid era.”
In absolute terms, the company expects consumption to be well above pre-COVID levels but Vallat warned that the company’s explosive growth in the last two years will make for some tough comparisons. He nonetheless repeated the company’s full-year guidance, saying that Rémy was ahead of schedule in meeting its strategic targets.
Rémy Cointreau stock fell over 3% at the opening before paring losses to trade down less than 1% by 04:05 ET (09:05 GMT). The stock had more than doubled during the pandemic as locked-down consumers consoled themselves with small luxuries to compensate for the loss of other spending opportunities. It has held on to more than half of those gains despite the broad selloff in equities this year.
The company was able to push through some formidable price rises of over 11% on the year in the first half, another indicator of how much of this year’s inflation at the consumer price level has been driven by margin expansion rather than any other factors. Despite the price rises, sales volumes rose 9.7%, giving a total rise of 21% in organic sales.
The depreciation of the euro also added a powerful tailwind, adding over €48 million to reported sales and boosting its operating margin by 2.2 percentage points. Over the full year, the company said it expects currency factors to add between €110-120M in sales and €55-60M in operating profit.
Foreign exchange swings accounted for more than half of an overall 3.8-point expansion in margins. Much of the rest of the improvement came from the temporary suspension of marketing spending in China, the company fearing that consumers would be unable to respond to it in an environment of repeated localized lockdowns due to COVID-19.
Net profit rose 67% to €224M, while earnings per share rose 65% to €4.40.
