Cocktails in lockdown helped to soothe the woes of distillers but the pandemic’s effect on hospital admissions is disrupting chocolate maker Lindt.
France’s Remy Cointreau raised its profit forecast for the year as people buying its cognac and liqueurs to make drinks at home helped to offset a heavy hit from bar and restaurant closures.
Remy Cointreau said first-half profit will fall less than previously estimated, as more consumers bought its Cointreau liqueur to make cocktails in lockdown, offsetting the decline in sales for bars and restaurants.
The French distiller expects a “strong” recovery for the second half, boosted by the US and mainland China.
House of Remy Martin, which makes the group’s high-end Louis XIII and Remy Martin cognacs and last year brought in the bulk of sales, was worst-hit as revenues fell 39% organically - still ahead of the 44% slump forecast by analysts.
The group’s liqueurs and spirits division was more resilient, falling just 17%, compared to a 37% decline analysts predicted, thanks to good performance by Cointreau.
Remy’s brandy, gin, and whisky sales all declined as global lockdowns slowed airport traffic and duty-free sales, which makes up a significant portion of these brands’ business.
In early June, the company had forecast a limited decline in second-quarter sales and a fall of 45% to 50% in mid-year current operating profit, followed by a strong second-half recovery, buoyed by China and the US.
Analysts praised the update, noting a good performance for Remy Martin cognac in China.
The shares bounced as much as 5% before giving up the gains.
Swiss chocolatier Lindt & Spruengli said sales for the year will be 5% to 7% lower than last year, assuming there won’t be a second virus wave that leads to extensive lockdowns.
The company gained market share in all its key markets as it leaned on home deliveries, pick-up services, and expanded e-commerce to offset shuttered stores.
The results are better than expected but Lindt shares fell by over 3%.
“We expect organic sales in the full financial year to be around 5% to 7% lower than 2019,” the maker of Lindor chocolate balls said in a statement, while it now expects an operating profit margin of around 10%.
The company said the outlook was based on the assumption of no more large-scale lockdowns and a Christmas business similar to last year.
For the first half of 2020, Lindt report organic sales falling 8% to 1.53 billion Swiss francs, while net profit slid to 19.7 million francs, from 88.1 million francs in the year-ago period, Lindt & Spruengli said.
Sales were particularly affected by the restrictions on retail trade and the temporary closure of around 500 of Lindt’s own shops over Easter, normally a peak season for sales.