Rémy Cointreau: Outstanding Results

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Remi Cointreau (Paris: RCO) generated consolidated sales of 645.3 million euros in the first half, up 52.0% (1) (49.8% on a reported basis) on an organic basis and up 26.9% on an organic basis compared to the first half of 2019- 20 (pre-pandemic). This performance reflects continued excellent momentum in China and the United States, as well as a strong improvement in Europe.

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Current operating profit came in at EUR212.9 million, which equates to exceptional growth of 104.5% on an organic basis and 100.4% on a reported basis.

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Current operating margin climbed 8.3 percentage points (pp) to an all-time high of 33.0% (up 8.5pp on an organic basis).

Eric Valette, CEO of Remy Cointreau, said: “This has been an amazing semester for Remy Cointreau, reflecting on our market share gains and the solid progress we have made on our strategic priorities. These results are the key to becoming a worldwide leader in extraordinary spirits. Strengthen our potential. They will be able to fuel tomorrow’s growth, by accelerating our investments in our brands, our capabilities and our plan against global warming #APlanetOfException. We should be proud but also humble because We operate in a resilient business. Our great brands are well positioned to benefit from worldwide upgrade trends built over centuries.”

(1) All references to “organic growth” in this press release refer to developments in the realm of constant currency and consolidation.

Key figures in EURm (unless Reported otherwise stated) H1 2021-22 H1 2020-21 change Organic change vs. H1 vs. H1 '20-21 '19-20 Sales 645.3 430.8 +49.8% +52.0% +26.9% Gross margin (%) 69.1% 64.7% +4.4pp +4.0pp +2.0pp Current Operating Profit 212.9 106.2 +100.4% +104.5% +58.8% Current operating margin (%) 33.0% 24.7% +8.3pp +8.5pp +6.7pp Net profit attributable to the Group 134.0 65.0 +106.1% +111.6% +51.7% Net profit excluding non-recurring items 148.2 65.2 +127.4% +132.9% +78.9% Net margin excluding non-recurring items (%) 23.0% 15.1% +7.8pp +8.0pp +6.8pp EPS after minority interests (EUR) 2.67 1.30 +104.9% - - EPS excluding non-recurring items (EUR) 2.95 1.31 +126.0% - - Net debt/EBITDA ratio 0.77 2.04 -1.27 - -

Current Operating Profit by Division

In EURm (unless Reported otherwise stated) H1 2021-22 H1 2020-21 change Organic change vs. H1 vs. H1 '20-21 '19-20 Cognac 188.1 93.6 +101.0% +101.9% +51.2% As % of sales 40.5% 30.6% +9.8pp +9.2pp +6.4pp Liqueurs & Spirits 37.8 18.6 +103.2% +121.5% +92.7% As % of sales 23.1% 16.6% +6.4pp +8.4pp +8.6pp Subtotal: Group Brands 225.9 112.2 +101.4% +105.2% +57.3% As % of sales 35.9% 26.9% +9.1pp +9.2pp +7.0pp Partner Brands 0.3 0.5 -29.4% -21.0% n/a As % of sales 2.0% 3.6% -1.6pp -1.3pp +6.2pp Holding company costs (13.4) (6.5) +107.5% +107.6% +48.6% Total 212.9 106.2 +100.4 +104.5% +58.8% As % of sales 33.0% 24.7% +8.3pp +8.5pp +6.7pp

cognac

First-half sales in the Cognac division were up 55.2% on an organic basis (up 52.1% on a reported basis), which included volume growth of 35.0% and 20.2% growth from the price/mix effect, contributing to the growing mid-to-end. Thank you. The range products (Remy Martin Club in China and 1738 Accord Royal in the United States) and worldwide price increases were implemented in April 2021. All regions contributed to this outstanding performance, most notably the United States, where consumption has been very strong, and China, where the group performed extremely well during the Mid-Autumn Festival.

Current operating profit on an organic basis rose 101.9% to EUR 188.1 million (up 101.0% on a reported basis), translating into an all-time high of 40.5% in organic growth at a margin of 9.2pp. This increase reflects a significant increase in gross margin (divided equally between volume and price/mix effects), strong overhead absorption and marketing and communications spending in key markets, particularly China and the United States.

Liqueurs and Spirits

First-half sales in the Liquor & Spirits division were up 46.9% on an organic basis (up 46.4% on a reported basis). All regions contributed to this very strong performance, notably key markets including the United States, where House of Cointreau is extremely popular, and Europe, driven by strong consumption since the reopening of the on-trade channel The market share for Cointreau has increased. Rapid recovery in Metaxa sales.

Current operating profit came in at EUR37.8 million, up 121.5% on an organic basis (up 92.7% on an organic basis relative to H1 2019-20) and up 103.2% on a reported basis. This translated into current operating margins of 23.1% (up 8.4pp on an organic basis), driven by a sharp uptick in gross margins (divided equally between volume and price/mix effects) across brands and tighter control of overheads . At the same time, the group maintained a consistent level of marketing and communications spending.

partner brands

Partner brands grew 23.6% on an organic basis in the first half (up 24.6% on a reported basis), driven by favorable base impacts, particularly in Europe, and strong momentum in the Benelux countries and the United Kingdom.

Current operating profit came in at EUR0.3 million compared to EUR0.5 million in the first half of the financial year 2020-21.

consolidated result

Current operating profit (COP) came in at EUR 212.9 million, up 104.5% on an organic basis (up 58.8% compared to the first half of 2020) and up 100.4% on a reported basis. This performance was primarily driven by an extraordinary increase in current operating profit from Group Brands (up 105.2% on an organic basis) and takes into account an EUR6.9 million increase in holding costs, including a EUR2.0 million donation to the Remy Cointreau Foundation . and EUR4.9 million in relation to medium- and long-term retention measures, employee savings and the employee share ownership scheme.

This performance also includes an adverse currency impact (-EUR1.9 million). The average EUR/USD conversion rate declined from 1.14 in H1 20/21 to 1.19 in H1 21/22, while the average storage rate (linked to the group’s hedging policy) came out to 1.18 compared to 1.18 in H1 21/22. H1 20/21.

Finally, this performance takes into account adverse consolidation scope impacts with respect to the acquisitions of Brillette and Telmont -UR2.4 million.

Current operating margin on a reported basis rose sharply 8.3pp to 33.0% (up 8.5pp on an organic basis). This rapid uplift reflects the following:

-- organic growth of 4.0pp in the gross margin to 69.1% (its highest ever level), driven by very favourable price/mix effects and a sharp rise in volumes -- excellent absorption of overheads (ratio down 5.3pp on an organic basis) -- increased marketing and communication spend (with the ratio up 0.8pp on an organic basis) to boost brands' medium-term growth potential -- favourable currencyeffects (+0.4pp) and unfavourable consolidation scopeeffects (-0.6pp)

Operating profit on a reported basis came in at EUR199.3 million, up 88.0% after taking into account EUR13.6 million provisions for international customs risks related to prior periods.

In line with the reduction in the Group’s net financial debt, net financial expenditure improved from -EUR8.0 million in H1 20/21 to -EUR7.4 million in H1 21/22.

Tax expense totaled EUR58.1 million at an effective tax rate of 30.3% (excluding non-recurring items), a significant improvement over H1 20/21 (33.8% on a reported basis and excluding non-recurring items). This reform was mainly the result of a reduction in the tax rate in France, where the group generates most of its taxable income.

Taking into account the Group’s share in net income from associates, net profit attributable to the Group came in at EUR134.0 million, up 106.1% on a reported basis (up 111.6% on an organic basis).

Excluding non-recurring items, net profit attributable to the group came in at EUR148.2 million, up 7.8pp on a reported basis, giving a net margin of 23.0% (up 132.9% on an organic basis), up 7.8pp on a reported basis. (up to 8.0pp on organic basis).

Excluding non-recurring items, net income per share came in at EUR2.95, up 126.0% on a reported basis.

Net debt came in at 299.6 million euros, down 14.7 million euros as of 31 March 2021. In addition to free cash flow, this improvement in net debt primarily reflects the non-cash impact of the initial conversion of the Ocean portion. Loan for a nominal value of EUR153.4 million (EUR149.1 million under IFRS). As of 30 September 2021, applications were received for the conversion of 55.8% of the outstanding OCEANE bonds into Remi Cointreau shares. Thus a total of 1,398,822 shares were exchanged, which included 75,000 existing shares and 1,323,822 new shares. As of 30 September 2021, the share capital was made up of 51,850,385 shares, each worth EUR 1.60.

As a result, the net debt/EBITDA ratio came down to 0.77 as on 30 September 2021, as against 1.33 on 31 March 2021.

Upgraded full year guidance

For fiscal year 2021-22, Remi Cointreau reiterates its belief in its ability to outperform the exceptional spirits market and expects strong organic growth in sales, primarily driven by performance in the first half.

The Group reaffirms its intention to meaningfully increase its marketing and communications spend this year, particularly in the second half, to support its brands through recovery and fuel their medium-term growth potential.

Remi Cointreau is upgrading its full-year guidance and is now targeting very strong organic growth at current operating profit, driven by stronger than expected first-half results.

In light of the Group’s plans to increase marketing and communications spending and manage its strategic inventory in the fourth quarter, and given a higher basis of comparison in the second half, organic growth was fully driven by the outstanding growth seen in current operating profit. will operate. In the first half. This will make you angry…

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