Sharp drop in Current Operating Profit
Solid execution of cost-cutting plan: €145m achieved vs €100m target
-
Sales down-19.2% on an organic basis, hit by inventory adjustments in
the United States - Gross margin resilient at a high level: -1.3 pts on an organic basis at 71.2% (+4.0 pts vs 2019-20)
- Sustained and selective investment in marketing and communication: 21.4% of sales
- Solid execution of cost-cutting plan: €145m achieved vs €100m target
- COP: -27.8% on an organic basis, with margin down -3.0 pts organically at 25.5% (+3.4 pts vs 2019-20)
- EPS: €3.64, down -37.1% as reported, for an organic rise of +50.0% compared with 2019-20
- 2024-25 objectives: gradual recovery in sales in the course of the year and profitability protected
- From 2025-26: return to high single-digit average annual sales growth, with a gradual improvement in COP margin (on an organic basis)
- 2029-30 objectives confirmed
Rémy Cointreau’s (Paris:RCO) consolidated sales came to €1,194.1 million in 2023-24, -19.2% on an organic basis (+16.2% from 2019-20). Sales as reported were down -22.9%, including -3.7% in currency effect due primarily to trends in the Chinese renminbi and the US dollar.
Current Operating Profit was €304.4 million, down -27.8% on an organic basis (+34.9% from 2019-20). Above and beyond a record level of comparison, this figure reflects the significant fall in sales, which was partly offset by meaningful cost-cutting that generated €145 million in savings, of which 45% will be structural. Current Operating Margin declined by -3.0 points on an organic basis to total 25.5%.
Sales - in € million (unless otherwise stated) |
2023-24 |
2022-23 |
Reported change |
Organic change |
|
vs. 2022-23 |
vs. 2019-20 |
||||
Sales |
1,194.1 |
1,548.5 |
-22.9% |
-19.2% |
+16.2% |
Gross margin (%) |
71.2% |
71.3% |
-0.1 pts |
-1.3 pts |
+4.0 pts |
Current Operating Profit |
304.4 |
429.6 |
-29.1% |
-27.8% |
+34.9% |
Current operating margin (%) |
25.5% |
27.7% |
-2.3 pts |
-3.0 pts |
+3.4 pts |
Net profit - Group share |
184.8 |
293.8 |
-37.1% |
-35.9% |
+52.7% |
Net margin (%) |
15.5% |
19.0% |
-3.5 pts |
-3.9 pts |
+3.6 pts |
Net profit – Group share excl. non-recurring items |
194.8 |
296.6 |
-34.3% |
-33.0% |
+47.1% |
Net margin excl. non-recurring items (%) |
16.3% |
19.2% |
-2.8 pts |
-3.3 pts |
+3.3 pts |
|
3.64 |
5.79 |
-37.1% |
-35.9% |
+50.0% |
|
3.84 |
5.85 |
-34.3% |
-33.0% |
+44.4% |
Net debt /EBITDA ratio |
1.68x |
0.84x |
+0.84x |
+0.84x |
-0.18x |
Chief Executive Officer
We’ve come through a challenging year in which we moved swiftly to adapt our costs and optimize our structure, while calling for a major effort from our teams. I would like to take this opportunity to thank them, both for stepping up so quickly and for their willingness to take initiatives. In 2023, we also pursued our investment program, continued to innovate, and achieved major progress—in
Current Operating Profit by division |
|||||
|
|
|
|
||
In €m (unless otherwise stated) |
2023-24 |
2022-23 |
Reported change |
Organic change |
|
vs. 2022-23 |
vs. 2019-20 |
||||
Cognac |
265.7 |
405.2 |
-34.4% |
-33.0% |
+26.2% |
As % of sales |
34.1% |
36.8% |
-2.7 pts |
-3.9 pts |
+5.3 pts |
|
56.7 |
48.1 |
+18.0% |
+18.0% |
+55.4% |
As % of sales |
14.6% |
11.5% |
+3.2 pts |
+2.7 pts |
+0.7 pts |
Subtotal : Group brands |
322.4 |
453.3 |
-28.9% |
-27.6% |
+30.4% |
As % of sales |
27.6% |
29.8% |
-2.2 pts |
-3.0 pts |
+2.8 pts |
Partner brands |
(0.3) |
0.1 |
- |
- |
- |
Holding company costs |
(17.7) |
(23.7) |
-25.5% |
-25.3% |
-12.3% |
Total |
304.4 |
429.6 |
-29.1% |
-27.8% |
+34.9% |
As % of sales |
25.5% |
27.7% |
-2.3 pts |
-3.0 pts |
+3.4 pts |
Cognac
Sales at the Cognac division declined -25.1% on an organic basis (+5.8% compared with 2019-20), including a -29.7% fall in volumes and a Price-Mix gain of +4.6%. This trend reflects both a significant decline in sales in the Americas—where the Group continued destocking while holding prices steady, despite a sluggish environment and fierce promotional pressure—and resilient sales in the APAC1 and EMEA2 regions.
Current Operating Profit was down -33.0% on an organic basis to total €265.7 million, representing a -3.9 pt decline in Current Operating Margin to 34.1% (+5.3 pts from 2019-20). This trend reflects the strong fall-off in sales and includes an erosion of -1.8 pts of the gross margin (from a record high basis of comparison) that followed a rise in production costs which was only partly offset by the
The
Current Operating Profit rose +18.0% on an organic basis to total €56.7 million, for a steep +2.7 pt rise in margin on an organic basis to 14.6% (+0.7 pts from 2019-20). This trend reflects both a strong rise in gross margin (+1.2 pts on an organic basis) in the wake of price increases rolled out last April, and tight management of overheads. At the same time, the Group continued to invest heavily in marketing and communications to lay the groundwork for future growth.
Partner Brands
Sales of Partner Brands were down -6.1% on an organic basis (+2.3% from 2019-20), undermined by adverse trends in the Benelux and the
Current Operating Profit stood at -€0.3 million in 2023-24, compared with €0.1 million in 2022-23.
Consolidated results |
Current Operating Profit (COP) came to €304.4 million, down -29.1% as reported (-27.8% on an organic basis). This includes a -27.6% organic fall in COP for Group Brands, and a -€6.0 million reduction in the holding company’s expenses that illustrates cost-cutting in a tough economic environment.
This figure includes a negative currency effect (-€5.7 million) linked primarily to adverse trends in the Chinese renminbi and the US dollar. The average euro-renminbi conversion rate worsened from 7.14 in 2022-23 to 7.79 in 2023-24, while the average collection rate (linked to the Group’s hedging policy) deteriorated from 7.38 in 2022-23 to 7.59 in 2023-24. The average euro-dollar conversion rate worsened from 1.04 in 2022-23 to 1.08 in 2023-24, and the average collection rate improved from 1.11 in 2022-2023 to 1.10 in 2023-24.
Current Operating Margin stood at 25.5%, down -3.0 points on an organic basis, and down -2.3 points as reported. This reflects the combined impact of:
- a 1.3 pt decline in gross margin on an organic basis to 71.2%, hit by the high basis of comparison (+4.0 points from 2019-20), rising production costs, and a negative brand-mix effect
- a stabilization of the marketing and communication spend ratio (spending up by 3.5 pts from 2019-20)
- a controlled increase of the overhead costs ratio (-1.9 pts on an organic basis) reflecting a 12.0% organic reduction in the cost base (down by 2.9 points from 2019-20)
- a favorable currency effect: +0.7 pts
Other operating income and expenses totaled -€12.8 million in 2023-24 compared with -€3.1 million in 2022-23, and consisted mainly of the cost of restructuring distribution networks in
Net financial expense stood at -€38.5 million in 2023-24 (vs -€17.6 million in 2022-23), amid higher interest rates and renewal of long-term credit lines.
Tax charges came to €69.4 million, setting the effective tax rate at 27.4% in 2023-24 (27.1% excluding non-recurring items). This compares with 28.4% in 2022-23 (28.3% excluding non-recurring items) and reflects geographical mix.
Net debt stood at €649.7 million, or €113.1 million more than at
Return on Capital Employed (ROCE) came to 15.5% on
At the annual general meeting to be held on
“The Sustainable Exception”: supporting responsible growth |
In 2019-20,
In 2023-24,
New Generation Terroirs
To meet the challenges of adapting its terroirs to the hazards of climate change,
- make terroirs more resilient as the climate becomes more erratic, and thus secure a steady supply of essential raw materials over the long term
- promote our soils as carbon sinks in the fight against global warming
For the past 10 years,
Reducing Greenhouse Gases
In 2023-24, the Group’s total carbon footprint, including scopes 1, 2 and 3, stood at 167,459 tCO2eq, down -15.0% from the previous year. This was achieved on the back of a decline in volumes produced and all the actions implemented by the Group throughout its value chain.
- GHG emissions for scopes 1 and 2 (5%) were down by -10.0%, following a decline in volumes distilled and more energy-efficient operations at production sites.
-
GHG emissions for scope 3 (95%) were down by -15.0%:
- Emissions linked to packaging: -27.0% (79% of products sold without packaging in 2023-24)
- Emissions linked to transport: -21.0%
Water Stewardship Plan
In 2023, the Group revised its approach to sustainable water management under a Water Stewardship Plan designed to structure and accelerate implementation.
This Plan calls for action on three fronts:
- reducing water withdrawals at production sites
- improving quality and recovery of effluents
- regenerating water through high-impact actions, particularly in areas of water stress
A total of 210,663 m3 of water were used in 2023-24, down -19.0%.
2024-25 objectives |
Despite the sharp fall in its 2023-24 results,
- high single-digit annual growth in sales on average and on an organic basis
- a gradual organic improvement in Current Operating Profit margin
In a complex environment with limited visibility in its main markets,
-
continued inventory adjustments in the
Americas , given the still-negative trend in depletions3 - a high basis of comparison in the APAC region (sales up +55% in H1 2023-24 compared with H1 2019-20)
- mixed consumption levels in the EMEA region.
Against this backdrop,
In 2024-25, the Group will build on:
- the resilience of its gross margin thanks to a measured, selective rise in prices amid moderate inflation
- normalization of its marketing & communication/salesratio, at a level much higher than in 2019-20
- tight control of overheads to offset most of the rise in costs resulting from the reversal of temporary savings achieved in 2023-24.
- a negative impact on sales between -€5 million and -€10 million
- a favorable impact on Current Operating Profit of between +€3 million and +€7 million
2029-30 objectives confirmed |
The Group targets a gross margin of 72% and a Current Operating Margin of 33% based on 2019-20 consolidated scope and exchange rates.
As part of The Sustainable Exception plan,
A webcast for investors and analysts will be held today, starting at 9.00 (CET) with
Appendices |
||||||||
|
||||||||
Sales and Current Operating Profit by division |
||||||||
€m (unless otherwise stated) |
2023-24 |
2022-23 |
Change |
|||||
Reported A |
Organic B |
Reported C |
Reported A/C-1 |
Organic B/C-1 |
||||
Sales |
|
|
|
|
|
|||
Cognac |
778.6 |
823.9 |
1,100.0 |
-29.2% |
-25.1% |
|||
|
387.8 |
399.6 |
418.9 |
-7.4% |
-4.6% |
|||
Subtotal: Group Brands |
1,166.5 |
1,223.5 |
1,518.9 |
-23.2% |
-19.4% |
|||
Partner Brands |
27.7 |
27.8 |
29.6 |
-6.6% |
-6.1% |
|||
Total |
1,194.1 |
1,251.3 |
1,548.5 |
-22.9% |
-19.2% |
|||
Current Operating Profit |
||||||||
Cognac |
265.7 |
271.4 |
405.2 |
-34.4% |
-33.0% |
|||
As % of total sales |
34.1% |
32.9% |
36.8% |
-2.7 pts |
-3.9 pts |
|||
|
56.7 |
56.7 |
48.1 |
+18.0% |
+18.0% |
|||
As % of total sales |
14.6% |
14.2% |
11.5% |
+3.2 pts |
+2.7 pts |
|||
Subtotal: Group Brands |
322.4 |
328.1 |
453.3 |
-28.9% |
-27.6% |
|||
As % of total sales |
27.6% |
26.8% |
29.8% |
-2.2 pts |
-3.0 pts |
|||
Partner Brands |
(0.3) |
(0.3) |
0.1 |
- |
- |
|||
Holding Company costs |
(17.7) |
(17.7) |
(23.7) |
-25.5% |
-25.3% |
|||
Total |
304.4 |
310.1 |
429.6 |
-29.1% |
-27.8% |
|||
As % of total sales |
25.5% |
24.8% |
27.7% |
-2.3 pts |
-3.0 pts |
Summary income statement |
|||||
€m (unless otherwise stated) |
2023-24 |
2022-23 |
Change |
||
Reported |
Organic |
Reported |
Reported |
Organic |
|
|
A |
B |
C |
A/C-1 |
B/C-1 |
Sales |
1,194.1 |
1,251.3 |
1,548.5 |
-22.9% |
-19.2% |
Gross margin |
850.2 |
876.3 |
1 103.8 |
-23.0% |
-20.6% |
Gross margin (%) |
71.2% |
70.0% |
71.3% |
-0.1 pts |
-1.3 pts |
Current Operating Profit |
304.4 |
310.1 |
429.6 |
-29.1% |
-27.8% |
Current operating margin (%) |
25.5% |
24.8% |
27.7% |
-2.3 pts |
-3.0 pts |
Other non-current income and expenses |
(12.8) |
(13.1) |
(3.1) |
- |
- |
Operating profit |
291.6 |
297.0 |
426.5 |
-31.6% |
-30.4% |
Net financial result |
(38.5) |
(39.0) |
(17.6) |
+118.7% |
+121.3% |
Profit before Tax |
253.2 |
258.0 |
408.9 |
-38.1% |
-36.9% |
Corporate income tax |
(69.4) |
(70.8) |
(116.3) |
-40.3% |
-39.2% |
Tax rate (%) |
-27.4% |
-27.4% |
(28.4%) |
+1.0 pts |
+1.0 pts |
Share in profit (loss) of associates/minority interests |
1.1 |
1.1 |
1.2 |
-12.1% |
-12.1% |
Net profit – Group share |
184.8 |
188.3 |
293.8 |
-37.1% |
-35.9% |
Net margin (%) |
15.5% |
15.1% |
19.0% |
-3.5 pts |
-3.9 pts |
Net profit – Group share excl. non-recurring items |
194.8 |
198.6 |
296.6 |
-34.3% |
-33.0% |
Net margin excl. non-recurring items (%) |
16.3% |
15.9% |
19.2% |
-2.8 pts |
-3.3 pts |
|
3.64 |
3.71 |
5.79 |
-37.1% |
-35.9% |
EPS Groupe – share excluding non-recurring items (€) |
3.84 |
3.92 |
5.85 |
-34.3% |
-33.0% |
Reconciliation of net profit and net profit excluding non-recurring items |
||
In €m |
2023-24 |
2022-23 |
Net profit – Group share |
184.8 |
293.8 |
Other operating income and expenses |
12.8 |
3.1 |
Tax on “other operating income and expenses” |
(2.8) |
(0.4) |
Net profit - Group share excluding non-recurring items |
194.8 |
296.6 |
Cash-Flow statement |
|||
As of |
2024 |
2023 |
Change |
Opening net financial debt ( |
(536.6) |
(353.3) |
-183.3 |
Gross operating profit (EBITDA) |
356.4 |
481.6 |
-125.2 |
WCR for eaux-de-vie and spirits in ageing process |
(116.9) |
(152.6) |
+35.7 |
Other working capital items |
(27.2) |
(42.0) |
+14.8 |
Capital expenditure |
(80.9) |
(75.6) |
-5.3 |
Financial expenses |
(24.7) |
(13.3) |
-11.4 |
Tax payments |
(88.4) |
(140.4) |
+52.0 |
Net flows on other non-current income and expenses |
(4.5) |
(9.2) |
+4.7 |
Free Cash-Flow |
13.8 |
48.6 |
-34.8 |
Dividends |
(152.7) |
(111.0) |
-41.7 |
Capital increase / share buyback |
- |
(162.7) |
+162.7 |
|
50.8 |
42.9 |
+7.9 |
Conversion differences and others |
(24.9) |
(1.1) |
-23.9 |
Other Cash flow |
(126.8) |
(231.9) |
+105.1 |
Total cash flow for the period |
(113.1) |
(183.3) |
+70.2 |
Closing net financial debt ( |
(649.7) |
(536.6) |
-113.1 |
A Ratio (Net debt/EBITDA) |
1.68 |
0.84 |
0.84 |
Balance sheet |
||
As of |
2024 |
2023 |
Non-current assets |
1,037.3 |
1,004.4 |
Current assets |
2,333.4 |
2,182.5 |
o/w inventories |
1,962.8 |
1,815.8 |
o/w Cash and equivalent |
93.0 |
73.7 |
Total Assets |
3,370.7 |
3,187.0 |
Shareholders’ equity |
1,845.6 |
1,755.1 |
Non-current liabilities |
590.3 |
396.5 |
o/w Long term financial debt |
514.9 |
325.1 |
Current Liabilities |
934.8 |
1,035.3 |
o/w Short-term financial debt |
227.8 |
285.3 |
Total Liabilities and Shareholders’ equity |
3,370.7 |
3,187.0 |
Definitions of alternative performance indicators |
Due to rounding, the sum of values presented in this document may differ from totals as reported. Such differences are not material.
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 growth in sales and Current Operating Profit
Organic growth is calculated excluding the impact of exchange rate fluctuations, acquisitions and disposals. This indicator serves to focus on Group performance common to both financial years, which local management is more directly capable of measuring.
The impact of exchange rates is calculated by converting sales and Current Operating Profit for the current financial year using average exchange rates (or, for Current Operating Profit, the hedged exchange rate) from the previous financial year.
For acquisitions in the current financial year, sales and Current Operating Profit of acquired entities are not included in organic growth calculations. For acquisitions in the previous financial year, sales and Current Operating Profit of acquired entities are included in the previous financial year; however, they are only included in current year organic growth calculations with effect from the anniversary date of the acquisition.
For significant disposals, data is post-application of IFRS 5, under which results of entities disposed of are systematically reclassified under “Net earnings from discontinued operations”.
Indicators “excluding non-recurring items”
The two items set out below constitute key indicators for measuring recurring business performance, since they exclude significant items which, by virtue of their unusual nature, cannot be considered inherent to the Group’s ongoing performance:
- Current Operating Profit consists of operating profit before other non-recurring operating income and expenses.
- Net profit attributable to the Group excluding non-recurring items consists of net profit attributable to the Group adjusted to exclude other non-recurring operating income and expenses, associated tax effects, profit from deconsolidated, divested and discontinued operations and the contribution from dividends paid in cash.
Gross operating profit (EBITDA)
This measure, which is used in particular to calculate certain ratios, equates to Current Operating Profit less amortization and depreciation expenses on intangible assets and property, plant and equipment for the period, expenses arising from stock option plans, and dividends received from associates during the period.
Net debt
Net financial debt as defined and used by the Group is equal to the sum of long- and short-term financial debt and accrued interest, less cash and cash equivalents.
About
All around the world, there are clients seeking exceptional experiences; clients for whom a wide range of terroirs means a variety of flavors. Their exacting standards are proportional to our expertise – the finely-honed skills that we pass down from generation to generation. The time these clients devote to drinking our products is a tribute to all those who have worked to develop them. It is for these men and women that
Regulated information in connection with this press release can be found at www.remy-cointreau.com
______________________________________
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2
3
Wholesalers’ sales to retailers
View source version on businesswire.com: https://www.businesswire.com/news/home/20240605581141/en/
Investor relations: Célia d’Everlange / investor-relations@remy-cointreau.com
Media relations: Mélissa Lévine / press@remy-cointreau.com
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