French spirits group Remy Cointreau first-half profit falls on China sales

French spirits group Remy Cointreau posted a 7.3% fall in first-half like-for-like operating profit yesterday, blaming soft demand for its premium cognac in China.

The maker of Remy Martin cognac, Cointreau liqueur, and Mount Gay Rum enjoyed robust demand in the US, its top market.

It kept its forecast for positive growth in current operating profit at constant exchange rates in the 2015/2016 full year, excluding acquisitions and divestments.

Current operating profit for the six months to September 30 reached €107m.

On a reported basis, positive currency effects lifted profit by 4.7%.

The performance was slightly below analysts’ expectations for €107.6m in operating profit, according to a Thomson Reuters IBES poll.

The Remy Martin cognac division, which accounts for 80% of group profit, saw its operating profit fall 5.8% in like-for-like to €85.9m.

Cognac achieved a strong performance in the US, driven by the success of the 1738 Accord Royal cognac.

However, this gain did not offset a decline in Asia-Pacific, the group said.

It blamed changes in its distribution network in China and cautious Chinese wholesalers.

The US is now a bigger market for Remy Cointreau than China, accounting for slightly over 30% of sales against nearly 20% for China.