French spirits group Remy C
ointreau SA warned full-year operating profit would fall by at least 20 percent as a Chinese government crackdown on ostentatious spending hurts demand for its premium cognac.
Its shares plummeted more than 10 percent to a near two-year low.
The maker of Remy Martin cognac, Cointreau liqueur and Mount Gay Rum said wholesalers in China were still running down high inventories and it did not know when demand could pick up, with sales prospects for the Chinese New Year in February looking bleak.
"The second half will be sharply impacted by China and we want to continue investing, so we expect a decline of 20 percent or slightly more in full-year operating profit," Chief Executive Frederic Pflanz told a news conference on Tuesday.
"We still have a tense situation on stocks and we do not have positive expectations for the Chinese New Year," Pflanz added.
Remy's operating profit in its last fiscal year was 245.4 million euros ($331.5 million).
Like its global rivals such as Diageo Plc and Pernod Ricard SA, Remy has been hit by a Chinese government crackdown on gift-giving and personal spending by civil servants, as well as slowing economic growth in the world's second-biggest economy.
Pernod for instance flagged this issue earlier this year, saying business during the Chinese New Year was "softer" this year than last.
Yet the emerging concern is that the squeeze is continuing with no signs of when demand will pick up.
Analysts at brokerage Liberum Capital said Remy's profit guidance was "disappointing and worrying" and was "much worse than our estimate of minus 8 percent for the year and consensus of minus 2 percent".
ointreau SA warned full-year operating profit would fall by at least 20 percent as a Chinese government crackdown on ostentatious spending hurts demand for its premium cognac.Its shares plummeted more than 10 percent to a near two-year low.
The maker of Remy Martin cognac, Cointreau liqueur and Mount Gay Rum said wholesalers in China were still running down high inventories and it did not know when demand could pick up, with sales prospects for the Chinese New Year in February looking bleak.
"The second half will be sharply impacted by China and we want to continue investing, so we expect a decline of 20 percent or slightly more in full-year operating profit," Chief Executive Frederic Pflanz told a news conference on Tuesday.
"We still have a tense situation on stocks and we do not have positive expectations for the Chinese New Year," Pflanz added.
Remy's operating profit in its last fiscal year was 245.4 million euros ($331.5 million).
Like its global rivals such as Diageo Plc and Pernod Ricard SA, Remy has been hit by a Chinese government crackdown on gift-giving and personal spending by civil servants, as well as slowing economic growth in the world's second-biggest economy.
Pernod for instance flagged this issue earlier this year, saying business during the Chinese New Year was "softer" this year than last.
Yet the emerging concern is that the squeeze is continuing with no signs of when demand will pick up.
Analysts at brokerage Liberum Capital said Remy's profit guidance was "disappointing and worrying" and was "much worse than our estimate of minus 8 percent for the year and consensus of minus 2 percent".
