aker of Remy Martin cognac, said it expects to report fiscal full-year earnings that slumped as much as 40% after sales fell more than analysts anticipated on lower demand in China. Remy Cointreau’s adjusted operating profit probably fell 35% to 40% in the 12 months through March, the company said today. Citigroup and UBS analysts had estimated a 33% decline. The stock fell as much as 6.3%, the steepest decline in more than four months.
Measures by Chinese President Xi Jinping’s government to restrain spending on gifts and banqueting have been weighing on sales of cognac in the country, particularly expensive blends. Remy had said that in January that it expected no relief from the Chinese New Year festival, a key gifting period, which fell in the final three months of the period.
“Recent events in China are not a blip but instead mark a structural change in the market,” Jonathan Fyfe, an analyst at Mirabaud Securities LLP, wrote in a note to investors.
The stock traded 5.3% lower at €59.66 at 9:11 a.m. in Paris, where the company is based.
Sales Drop
Full-year sales slid 11% on an organic basis, which excludes acquisitions and currency shifts. Analysts expected a 9.7% decline, according to the median of nine estimates compiled by Bloomberg.
The company said it’s pursuing a “destocking effort against the backdrop of further stringent measures to restrict conspicuous consumption” in China.
Organic revenue declined 16% in the fourth quarter as cognac sales plunged 32%.
The spirits maker said Jan. 21 it anticipated a “significant double-digit decline” in profit in the 12 months through March.
