Current operating profit up 20% (organic).
For the third consecutive year, Rémy Cointreau has achieved double-digit growth (20% organic, and 10.2% published) in current operating profit, which amounted to €153.8 million on turnover of €785.9 million. The current operating margin was 19.6%, a 2.8 point organic growth.
These excellent results confirm the relevance of the strategic refocus on Rémy Cointreau’s major brands.
The current financial year was marked, in particular, by the following factors:
- a remarkable dynamism in Cognac sales,
- all the Group’s brands moving upmarket,
- an ongoing price increase policy,
- focused and sustained marketing investment,
- a significant reduction in debt, and
- the decision to leave Maxxium in 2009.
A €241 million provision, payable in 2009, was recorded at 31 March 2007 in “Other
operating income and expenses” in respect of the compensation for leaving Maxxium.
Taking this charge into account, the net loss – Group share - amounted to €23 million.
Cognac – Rémy Martin had an excellent year. Asia, the US and Russia were the major drivers of strong growth in the very top of the range qualities. In organic terms, current operating profit grew by 28%, and the operating margin improved by 3.4 points to 25.1%, with increased marketing investment.
Liqueurs & Spirits – Overall, the division reported 15.1% organic growth in operating profit and an operating margin of 26.4% (up 3.4 points organically). Cointreau achieved another year of good growth, continuing to establish its new contemporary image in the US and to extend it across Europe. Passoa, St Rémy, Metaxa and Mount Gay Rum continued to develop in their key markets. Marketing investment was focused on on-trade efforts, the preferred distribution channel for the category.
Champagne – Current operating profit for this division showed organic growth of 19.3% due to the strong dynamism in sales of Piper-Heidsieck and Charles Heidsieck. The operating margin improved to 8% (9% at comparable exchange rates). These results reflect the good strategic position of champagne, with the cessation of secondary brands and the anticipated
productivity improvements.
Partner brands – The year was marked by the termination of major contracts in Europe (duty-free in Germany) and in the US. The performances of other partner brands distributed by Rémy Cointreau USA, in particular Scotch whiskies and new Californian wines, were good. Initial results for Imperia vodka are very encouraging.
Consolidated results
Turnover at €785.9 million increased by 3.8% on a like-for-like basis, while Group brands grew by 6.8%. The US and the Asian markets drove sales whereas renewed growth in Europe was mainly due to Russia.
Current operating profit was €153.8 million, an increase of 10.2%, which took into account an unfavourable euro/dollar exchange rate. Growth was 20% on a like-for-like basis.
Current operating margin was 19.6%; at constant exchange rates it was 20.7%. This illustrates the Group’s determination to improve profitability.
Maxxium – On 23 November 2006 Rémy Cointreau announced the decision to cancel its global distribution agreement with Maxxium, with effect from 30 March 2009.
Compensation totalling €241 million before tax for leaving the network was provided for under “Other operating income and expenses” at 31 March 2007, with payment in 2009.
Taking into account this specific item, the operating loss was €89.6 million compared with a profit of €121.3 million the previous year.
Financial charges amounted to €37.3 million, a significant improvement compared with the previous year. This reduction arose mainly from the significant fall in average debt, as well as the decline in its cost.
The loss from continuing operations was €66.6 million after tax, compared with a profit of €53.3 million the previous year. This takes into account recognition of a deferred tax asset in respect of the tax deduction of the Maxxium compensation.
Profit from discontinued operations or in the process sale of €45.2 million comprised the
operating profit after tax of operations sold and the net gain on disposals (Bols liqueurs and spirits, Cognac de Luze, the distribution operations in Hungary and Clés des Ducs , in the process of being sold).
Net loss – Group share, inclusive of these items, was €23 million. Financial debt fell by 27% to €562.1 million, a decline of €209.4 million. The disposal of assets generated €160.7 million in the year 2006/07.
Shareholders’ equity was €854.1 million, a reduction of €64.6 million compared with the previous year, due to the provision for the exit penalty from Maxxium.
At the Annual General Meeting to be held on 31 July 2007, a dividend of €1.20 will be
proposed for approval by the shareholders, with the option of payment in shares up to 20% of the dividend, or of payment in full in cash.
Outlook
In 2007/08, the Rémy Cointreau Group will continue its value creation strategy and the development of its major brands in principal world markets, in order to generate significant organic growth in current operating profit.
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