(News Bulletin 247) – The spirits group lowers its forecasts for its staggered 2025-2026 financial year, citing a deterioration in market conditions in China and a less powerful than expected rebound in activity in the United States.

This summer, European spirits groups benefited from a little visibility on customs duties in China and the United States.

Several agreements have enabled large companies in the sector to know what to expect regarding the customs surcharges implemented in these two countries. This led Rémy Cointreau to raise its profitability targets for the current financial year.

However, the horizon for spirits groups is not clear yet. At the end of August, Pernod Ricard did not provide quantified objectives for the 2025-2026 financial year and indicated that it expected a decline in its sales in the first quarter due in particular to inventory adjustments in China and the United States.

For Rémy Cointreau, Barclays warned at the end of July that “structural concerns persisted”. The bank noted that “depletions”, that is to say sales from wholesalers to distributors, a leading indicator of demand, remained “low”.

A performance worse than feared

The figures published this Thursday by Rémy Cointreau are enough to give Barclays something to grind for. The group revealed this Thursday, October 30, a clear decline in its activity for the first half of its staggered 2025-2026 financial year. The turnover of the spirits group contracted by 8.2% in published data over one year, to 489.6 million euros. On a like-for-like basis, revenues were down 4.2%.

In the second quarter, Rémy Cointreau recorded a worse performance than expected by the market, with a turnover which fell by 11% on a comparable basis to land at 268.8 million euros. Oddo BHF was counting on a decline of 10%, when analysts cited by the research office anticipated a slightly less marked decline, of 8.6%.

Once again, the group is affected by the weakness of the Chinese market. This is demonstrated by the sharp decline of 13.5%, on a comparable basis, in the turnover of the cognac division which represents 60% of the group’s activity. And, according to TP ICAP Midcap, cognac sales in the Asia Pacific region collapsed by 25% in the second quarter.

The owner of the Rémy Martin brand explains that this performance reflects a difficult market environment in China. This quarter was also penalized by the late arrival of the Mid-Autumn holiday (Moon Festival, which takes place in October, Editor’s note), which caused an unfavorable calendar effect. In July, TP ICAP Midcap had already warned of the negative effects of delaying this Moon festival in China. The company also points to a weakness in demand at the high end.

In the “Americas” zone, Rémy Cointreau’s other flagship market, cognac sales recorded a consecutive quarter of organic growth, which is described as strong, helped not only by favorable bases of comparison but also by a quarter-on-quarter improvement in sales from wholesalers to retailers. On the other hand, for liqueurs, this region recorded a drop in sales after a dynamic first quarter.

A lowering of the 2025-2026 outlook

This difficult market environment in China, and this less powerful than expected recovery in activity in the United States, forced Rémy Cointreau to significantly revise its annual outlook downwards.

For the current financial year, the group now anticipates organic growth in its “low single-digit” turnover, i.e. between 0% and 4%, compared to a “mid-single-digit” increase in its sales, i.e. between 4 to 6%.

Raised last August, the current operating profit target was lowered. Rémy Cointreau is counting on a “low double-digit and mid-teens” decline, i.e. between 11% to 15% of its current operating income, and no longer on a decline in its “mid-single” current operating income (between 4% and 6%). Also, the group expects a more unfavorable exchange rate effect on current operating income.

“The organic growth objective is generally aligned with consensus expectations which is at 3% and could adjust slightly downwards. We anticipate 1.6% for 2025/26. On the other hand, the warning (warning, Editor’s note) on the current operating result should lead to a very significant adjustment of consensus expectations for the current financial year and probably the following ones,” notes Oddo BHF.

“Signals on the recovery of cognac in the Americas could cushion the negative reaction of the market. We would not be surprised if the stock fell by almost 10% in the perspective of an adjustment of the consensus of current EBIT (operating result, editor’s note) which we expect between -10% and -15%”, concludes the research office which remains at “neutral” on the file.

On the Paris Stock Exchange, the market is sanctioning this lowering of annual targets, since Rémy Cointreau shares fell by 6.5% this Thursday, October 30 around 12:10 p.m.