French liqueurs and spirits group Rémy Cointreau has warned that full-year operating profits will fall at least 20 per cent from the twin effects of economic uncertainty in Europe and a “sharp” slowdown in sales in China.
The warning pushed the company’s shares down 8.3 per cent to ￠65.99 in Paris trading.
It comes as luxury groups – from watchmakers to producers of the world’s most expensive handbags – begin to contemplate life without vigorous sales growth in China, following a government crackdown on personal spending and gift-giving by officials.
“The last six months in China were tough and things are not going to get much better in the near future,” said Frédéric Pflanz, Remy’s chief executive.
Sales of the group’s signature Rémy Martin cognac during the first six months of its business year fell 10.4 per cent compared with the same period in 2012, to ￠327.2m. The group said the fall “reflected the unfavourable situation in the Chinese market”.
Rémy Martin accounts for more than half of the group’s net sales, which were ￠558m during the six months to the end of September, a decline in organic terms of 3.6 per cent compared with the same period a year ago.
The Paris-based group said that the impact of the Chinese market, where wholesalers are running down inventories, and the continuing uncertainty hanging over Europe, meant that it would probably “record a substantial double-digit decline at the end of the financial year” in operating profit.
Mr Pflanz told the Financial Times that the drop would be at least 20 per cent “or may be more”.
The warning came as Rémy Cointreau said that operating profit for the six months to the end of September was ￠132.7m, a decline of 7.3 per cent in organic terms compared with the same period last year, but ahead of analysts’ forecasts of about ￠124m.
The company reported results a month after French spirits producer Pernod Ricard said that reduced demand in China would have a negative impact on profit growth this year.
Mr Pflanz said that Rémy Cointreau did not expect the situation in China to be a long-term concern adding that it would maintain its prices. “We are making the choice to do less volume rather than relinquish the price, which is the first indicator of the quality of our product,” he said.
该集团标志性产品人头马(Rémy Martin) 白兰地本财年前6个月的销售额，比2012年同期下降了10.4%，至3.272亿欧元。该集团表示，销售额下降“反映了中国市场的不利形势”。