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2012 is likely to be remembered as a vintage year: sales +16.3% to €1.193bn; margin +40 bps to 20.2%; net profit +18% to €130m. Like-for-like results came in ahead of both guidance and expectations. Although we are set to see two mixed halves in the current business year to end-March 2014 (weak Q1/stable H1, followed by rebound in H2), we share management’s confidence in being capable of delivering yet a further strong increase in profits thanks to: (1) dynamic US business; (2) positive mix/pricing; (3) rebound by Liqueurs & Spirits division; (4) stabilised marketing spend; (5) optimisation of tax rate. PLUS rating reiterated.
The H1 2012 results did not disappoint! Operating performance was better than expected, boosted by more favourable pricing/product mix effects and in spite of growth in business slowing in Q2 (China). Demand for cognac is gaining further momentum in the USA (Christmas looks set to be good) while orders from Chinese wholesale stockists start to pick up again, pointing towards an excellent Q4 (January-March) quarter, boosted by the later Chinese New Year. Management expressed its firm confidence in growth prospects for both these markets, especially as regards China in 2013. PLUS rating reiterated.
The 2011-12 results did not disappoint! Operating performance is ahead of expectations even if the group benefited from a highly favourable Cognac market environment (volumes/prices) to prepare for the future (marketing investments/network to promote its brands). Beyond the surprise exceptional dividend for 2011, prospects are good for 2012 (China and USA). The group’s pricing power remains intact and a new share buyback program is likely. Plus rating confirmed!
Rémy Cointreau has an attractive growth profile (EPS +21% in 2011-13) with a reasonable valuation (PEG 2012 of 0.9x) thanks to dynamic performance in Asia, recovery in the USA and high pricing power. The recent disposal of Champagne will enable the strategic focus on premium Cognac, a profitable high growth business, to be implemented more rapidly and, with the new share buyback program, might help to finance an acquisition in upmarket spirits.
The publication of half-yearly sales (+10.9% at €475 million) boosted by +18.1% organic growth was ahead of expectations (€467 million, +15%). The Cognac branch (53% of sales and 75% of EBIT) remains highly dynamic with +23.2% organic growth in Q2, above every forecast (+11.7%). All this augurs well for the results to be announced at the end of November. Rémy Cointreau is focusing on its division with the highest added value, Cognac, a highly profitable emerging asset for which all the signals are set to green for 2011/12 (price increases, improved premium mix, low stocks). Plus code confirmed.
Rémy Cointreau benefits from excellent visibility for the next two years thanks to ongoing dynamism in Asia, recovery in the USA and high pricing power. Disposal of the Champagne business will accelerate the strategic focus on the high end of the market for Cognac, a business which enjoys strong and profitable growth. The growth profile (EPS +17.5% in 2011-12) is attractive and the valuation reasonable (PEG 2012 = 0.9x).
The quality of the 2010/11 results is good: strong top line growth, significant operating improvement and substantial debt reduction. A €1 exceptional dividend will therefore be paid out on top of the €1.3 ordinary dividend. The sale of the Champagne division will further enhance the results, giving Rémy Cointreau the opportunity to focus on its division with the highest added value, Cognac, a highly profitable emerging asset with all the indicators set to green for 2011/12 (price rises, better premium mix, low stocks). Plus code confirmed.
Rémy Cointreau benefits from good visibility in 2011 thanks to ongoing dynamism in Asia, recovery in the USA and high pricing power. Its growth profile (EPS +22.4% on average over 3 years) is attractive and its valuation reasonable (PEG of 0.84x). Disposal of the champagne business would enable the new upmarket strategic focus (the cognac business benefits from strong and profitable growth) to go ahead more rapidly.
Rémy Cointreau has confirmed the instruction given to a bank to sell its champagne division (Charles and Piper Heidsieck labels). We value this branch at €300 million (stocks and vineyards); as the Group is in no hurry to sell (with a gearing of 2.3 x), it will be able to maximize the sale price. This transaction would boost results in the short term and give Rémy Cointreau an opportunity to focus on its Cognac division with higher added value; this is a growing and highly profitable asset. PLUS code confirmed.
We have chosen Rémy Cointreau to add a more cyclical character to our selection in the Food & Beverages sector. The group is expected to benefit fully from the highly dynamic Asian market (China), together with signs of a recovery in the USA, an end to stock reductions and the appreciating dollar. The group offers the most attractive growth profile in the spirits sector at a reasonable price.
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