Remy Cointreau restructuring plan pays dividends

By Neil Merrett

- Last updated on GMT

Related tags: Cent, Remy cointreau, Percentage point

Remy Cointreau today posted a 3.8 per
cent organic growth in turnover to €785.9m for the
financial year ended 31 March as the company's ongoing
reorganisation begins to be felt.

Operating profit rose by 20 per cent to €153.8m on a like-to-like basis, while operating margins improved by just under 2 percentage points to 19.6 per cent. ​However Remy Cointreau's decision to end an outsourcing agreement with Maxxium cost it €241m in compensatory payments to the company. The one-off charge, which was booked in the financial year to 31 March, meant the company actually posted an operating loss of €89.6m and a net loss of €23m. Overall, the group recorded strong performances throughout its core beverage ranges, with its core cognac brands continuing to support growth throughout the company. The cognac segment generated €87.2m in operating profit for the year, a 28 per cent like-for-like growth compared to the previous 12 months. Operating margin for the segment was 25.1 per cent, a 3.4 percentage point increase over the previous year. The operating profit gain mainly came from emerging markets like Asia and Russia, aided by increased marketing investment, the company said. The company's liqueurs and spirits division also remained a strong growth area, with operating profit increasing by 15.1 per cent on a like-to-like basis to €55.3m. The improving performance of the Cointreau brand in the US and Europe reflected the overall performance of the division, the company said. The division also sells brands like Passoa, St Rémy, Metaxa and Mount Gay Rum. Though profit for its champagne ranges appeared to remain stable, organic growth was up 19.3 per cent. According to Remy Cointreau, the growth resulted from discontinuing some of the lesser known brands in the segment and a bid to improve productivity. Margins were also rose by eight percentage points to19.3 per cent. However, there were declines in turnover for the group's partner brands, which were down to €1.2m from €4.1m the previous year. The decline was a result of major restructuring away from a number of major European contracts, the most significant of which was a distribution deal with the Maxxium group. The cancellation will require the company to pay a €241m compensation package to Maxxium in 2009 as part of the deal. The division has some strong performers though, with scotch whiskies and Californian wines performing well, along with the Imperia vodka brand, which is benefiting from a boom in the market for white spirits. The group also booked €45.2 in gains from divesting a number of its operations during the financial year, including the Bols line of liqueurs and spirits, and Cognac de Luze labels from its portfolio.

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