(AOF) – Credit Suisse lowered its price target for Rémy Cointreau from €200 to €190 while restating its opinion about the underperformance. However, the broker welcomed strong trends in the US and Europe. China will punish the first quarter, but the recovery after that will be swift thanks to “retaliatory spending”.
AOF – Learn More
the main points
– Group of spirits born in 1703, with 12 international brands – Remy Martin, Brillette and Louis XIII cognac, diversified in wines and spirits with Cointreau and Metaxa for spirits, Mount Guy for rum, Botanist for gin, whiskey, Bruichladdich, Port Charlotte, Oakformor , Westlan and Hots Glasses;
– sales of 1.3 billion euros divided into 3 divisions – cognac by 72%, spirits by 25% and partner brands by 3%;
– International standing, the United States is the group’s leading market (55% of sales in the Americas), ahead of Europe, the Middle East and Africa (17%) and Asia Pacific (28%));
– Business model: Become No. 1 globally in Exceptional Spirit and control the distribution circuit (85% of sales), in order to control the sale of Exceptional Spirits, with a unit price above $50;
– The capital is controlled by the founding families (almost 57% of the shares and more than 70% of the voting rights), Eric Vallat is the Managing Director and Marcel Herrard Dubrell is the Chairman of the 12-member Board of Directors;
– Strong balance sheet enhanced by dividend payment, with net debt rating of A and leverage reduced to 0.77.
Ambition to become a world leader in morale, to achieve 2030 goals, with a gross margin of 72% by increasing its unit value and an operating margin of 33%;
– An innovation strategy focused on the growth of e-commerce, which has been accelerated through partnerships, such as those with Alibaba (1/5 digital sales in China);
Environmental strategy “Sustainable Exception 2025”: aims to be carbon neutral by 2050, 100% responsible purchasing, 62% of surface areas with responsible agricultural practices, 82% of renewable electricity;
– Strengthening of the whiskey division: launch of a product made in France, the second most consuming country of the beverage, and two sales campaigns of Bruichladdich in China and the UK;
– after the merger of the house of J.R. Brillet cognac and the house of champagne J. de Talmont and the sale of shares in the joint venture Pesso, which increased the size of the portfolio;
Supporting market valuation by controlling strategic stocks valued at more than €50 per share, facilitating customer acceptance for increased sales prices.
– Increased seasonality of sales, and then the fiscal year ended on March 31;
– lack of critical volume compared to competitors and strong dependence on Maison Rémy Martin (+ 80% of operating profit) for cognac with better profit margins than liquors and spirits;
– 54% growth in sales and a doubling of net profit in the first half of the fiscal year ending March 31.
– 2021/22 outlook: Despite restrictions in China and huge investments in marketing and communications in the second half, towards a sharp increase in sales and operating margin.
Prosperous fair trade in France
This trade has nearly tripled in five years, reaching €1.83 billion in 2020 in France. Based on a more profitable model for southern producers, developed by the NGO Max Havelaar in 1988. The latter ranks 90% of the world’s fair trade with a total of $10.7 billion in 2019. This trade is 95% of food products. Coffee, chocolate, bananas and cane sugar account for three-quarters of sales. On our territory, the NGO will name the wheat from the gills and the milk from the Poitou-Charentes. The French market is developing through mass distribution, which represented 54% of sales in 2020 compared to 42% in 2018. However, while organic accounts for 6.5% of consumption in France, the share of fair trade is limited to 1.5%.