(News Bulletin 247) – The spirits group is making strong progress on the Paris Stock Exchange, after reporting a drop in its cognac sales that was slightly less marked than analysts feared. Investors have the feeling that the group’s bad patch is coming to an end.

If there was one sector to avoid on the stock market last year, it was that of spirits groups. All of these values ​​have suffered significantly, penalized for several quarters by high inventory levels and a difficult market in the United States.

However, stocks are trading at such depressed prices that encouraging signs can encourage investors to return to these values.

This is the case this Friday with Rémy Cointreau. The French spirits group delivered its activity for the third quarter of its 2023-2024 financial year, a period which corresponds to the last three months of the year 2023.

This quarter, sales remain at half mast. On a comparable basis, they fell by 23.5% over one year. Sales of cognac fell by 33.9%, still on a comparable basis. Which turns out to be a little weaker than analysts feared, with the consensus standing at -34.1%, according to UBS.

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Thank you LVMH

The group explains that it perceives a “sequential improvement”, that is to say from one quarter to the next, in the United States, while the “Asia-Pacific” region was weighed down by destocking in China and a Unfavorable Chinese New Year calendar.

At the end of this quarter, Rémy Cointreau negatively amended its communication on its revenue outlook for its entire 2023-2024 financial year. The group previously anticipated a fall of between 15% and 20% on a comparable basis. Rémy Cointreau now estimates that the decline will be “at the bottom of the range”, therefore close to 20%.

And yet, Rémy Cointreau shares took off this Friday, gaining 14.5% around 11:25 a.m., which also boosted Pernod Ricard (+7%). How can such an increase be justified?

The answer lies partly with LVMH, which delivered better than expected annual results.

“Several factors can explain the jump in Rémy Cointreau shares. Firstly, the stock market reaction of LVMH (+10% this Friday) brings Rémy Cointreau and Pernod Ricard in its wake, because all these stocks are identified as consumer stocks. premium’. This plays a role,” explains Pierre Tegner, analyst at Oddo BHF.

Soon the end of the tunnel?

“Moreover we can think that the statements of the financial director of LVMH, Jean-Jacques Guiony, on Thursday evening, have an impact. The manager declared that on cognac the worst seems to be behind them in terms of demand. Which reinforces the “the idea that demand for cognac certainly remains in decline but that this decline is less pronounced than in previous quarters”, continues the analyst.

Last point: Rémy Cointreau is hardly expensive on the stock market, and despite this Friday’s increase, the stock remains down 44% over one year.

“Rémy Cointreau remains a stock that is operating at historically low valuation levels. Investors have been watching for the inflection point for several months. The stock’s reaction shows that a consensus is emerging around the idea that we are on this inflection point and that the dynamics should improve, even if this will not happen in a straight line”, explains Pierre Tegner.

“Rémy Cointreau is experiencing an annus horribilis over twelve months but we must keep in mind that this annus horribilis ends in two months,” concludes the analyst.