Rémy Cointreau said it expects full-year group organic sales to decline about 18%, the lower end of its guidance range, citing lack of visibility of a recovery in US demand and worsening market conditions in China.
The company said it would protect its current operating margin through cost controls and the implementation of a cost-cutting plan of over €50 million, and reiterated its target of full-year operating margin of between 21% and 22%.
The maker of Rémy Martin cognac and Cointreau liquor posted a smaller-than-expected decline in third-quarter sales as sales of cognac did not fall as much as forecast, although weakness in the key US and China markets, and potential tariffs weighed.
Rémy Cointreau's sales dropped 21.5% on an organic basis to €254.1 million ($265.25 million), compared with analysts' expectations of a 23.3% decline in a company-compiled consensus.
Sales of cognac, which makes up the bulk of Rémy's revenue, declined 22% to €155.7 million, compared to a decline of 27.6% expected by analysts.
Market Performance
The US and Chinese markets drive the majority of cognac sales, which accounts for around 70% of Rémy's revenue.
The United States saw a sharp contraction in sales in the quarter, hit by destocking and a high year-ago base, while sales in China reflected tougher market conditions and notably caution from distributors.
Rémy Cointreau said it does not expect America to return to growth before the fourth quarter at the earliest.
Beijing has imposed steep tariffs on brandy from the European Union as part of tit-for-tat measures after the bloc voted for tariffs on Chinese-made electric vehicles.
US President Donald Trump's threatened universal tariffs of 10% on foreign products would deliver a further blow to Rémy's US business.
