French spirits company Rémy Cointreau warned first quarter sales would fall by around 50-55% due to wholesaler destocking in Greater China and a sharp slowdown in key European and American markets due to the coronavirus crisis.
The maker of Rémy Martin cognac and Cointreau anticipated a 'very gradual' recovery in business during the second quarter of its 2020/21 fiscal year, and said it had reopened its French production sites in Cognac on 14 April and Angers on 20 April.
Rémy Cointreau's 2020/21 fiscal year started on 1 April.
Previous Forecast
The group made the forecasts as it reported an 11.2% fall in like-for-like sales to €1.025 billion ($1.11 billion) for the 2019/20 fiscal year that ended on 31 March, and predicted like-for-like current operating profit would fall by around 25%.
This was slightly better than guidance provided by Rémy Cointreau earlier this month of a 12% fall in annual sales and a 25-30% slump in operating profit.
The coronavirus pandemic closed bars and restaurants and halted international travel first in Asia and subsequently in Europe and the United States, during the final quarter of its fiscal year.
Q4 Performance
In the fourth quarter alone, revenue came in at €210.8 million, marking a like-for-like fall of 25.4%, slightly below company guidance issued earlier this month for a 26% slump.
Cognac sales, which make 72% of group total, fell 7.5% over the full year, and 25.2% in the fourth quarter alone.
Cognac sales had a strong year in China despite a drop in demand since January as a result of the epidemic, the group said.
Other Markets
In other cognac markets, sales were hit by a drop in tourism in Hong Kong, and more recently by airport closures due to the virus, while retailers were reducing their cognac stocks in the United States and distribution contracts in Europe also weighed.
China, where Rémy Cointreau makes an estimated 20% of its profits, is a key market for Rémy, along with the United States.
Last week, larger rival Pernod Ricard said that its key Chinese market was on a slow and gradual recovery since the start of April, reiterating its revised March guidance for an organic decline of around 20% in full-year current operating profit.
