Remy Cointreau

Fair Value EUR92 (+5%)         BUY
News published on October Thursday 18, 2012
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Remy Cointreau released this morning sales data for H1 2012/2013. Sales for the first six months of the year were EUR595.8m, an increase of 25.5%. Organic growth was 13.3%. After a strong Q1delivering organic sales growth of 24.4%, Q2 growth of 5.3% was more moderate and is likely to disappoint the market. Market expectations for Q2 were in a wide bracket of 8-18 percent growth.
Q2 weakness was across the board with 8% organic sales growth in cognac (vs 37.8% in Q1) and a fall by 0.4% for the liqueurs & spirits (8.5% in Q1).

ANALYSIS

  • Q2 weakness was across the board with 8% organic sales growth in cognac (vs 37.8% in Q1) and a fall by 0.4% for the liqueurs & spirits (8.5% in Q1).
  • For cognac the company recorded organic growth of 20.1% in H1 (after a 27% increase in H1 2011/12), driven by Asia, the US and Eastern Europe. This performance was achieved on the back of an already strong first six months the previous year. In the US, the positive trend noted since the beginning of the financial year was confirmed with double-digit growth. In Asia, growth continued to be principally driven by ultra-premium qualities, which account for the majority of progress. Europe presented a more mixed situation, with Russia continuing to do very well.
  • The Liqueurs & Spirit division recorded organic growth of 3.5% in H1. In Europe, Cointreau gained ground in the US and Europe, particularly in Germany and Russia, and St Rémy and Passoa also performed well. Sales of Metaxa slowed down again during the quarter, as the brand is particularly affected by the economic situation in Greece.
VALUATION
  • At 25.5x 2012/13 EPS the stock is valued well above the 17.5x for Diageo and Pernod Ricard.
NEXT CATALYSTS

  • H1 results 27th November
Analyst : Nikolaas Faes / 33(0) 1 56 68 75 22 / nfaes@bryangarnier.com
Sector Team : Peter Farren, Loïc Morvan, Cédric Rossi

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