Rémy Cointreau in high spirits

Rémy Cointreau is on course to make “a substantial” increase in profits in its financial year to the end of March.

In the first three quarters it has achieved sales growth of 18.2%, while organic turnover is 22.9% ahead.

The third quarter (from October to Christmas) was the French group’s strongest so far this financial year, with turnover increasing by a remarkable 30.5%, which sharply exceeded the group’s own forecasts.

This was achieved in part because Chinese New Year falls on Monday 23 January this year and thus the pre-stocking took place before Christmas as opposed to 2011 when the sell-in took place in January.

Rémy Cointreau did not quantify by how much this has affected its quarterly figures beyond saying that it was “significant”, but Pernod Ricard estimates that its own sell-in for Chinese New Year can account for up to 50,000 cases, mostly of Scotch and Cognac.

The volumes affected for Rémy Cointreau will be lower, but it made a point of saying that in the latest nine months sales of Rémy Martin Cognac were 37% ahead of the same time last year.

This has been achieved by increasing prices and further moving consumers, especially in Asia, up the quality scale, which of course improves margins.

In the third quarter, including the Chinese New Year sell in, sales of Rémy Martin were 55% ahead of the 2010 figure. The company also said that there was strong momentum in its Cognac sales in the US.

The final quarter will be less frenetic, but analysts were still predicting that Rémy Cointreau’s profits for the full year would show a 20% improvement on the 2011 figure.

However, finance director Frederic Pfanz said that the outcome was more likely to be a profits increase of between 15% and 18% because of the company’s heavy expenditure on advertising and distribution.

Sales of liqueurs and spirits including Mount Gay rum and Metaxa brandy are 8% ahead this year with Cointreau itself growing strongly in the US, Europe and Japan.

The annual results, which will be announced in April, are certain to contain an improved element of free cash flow for the French group.

While it has initiated a share buyback programme to enhance shareholder value, this is coming to an end, so speculation will continue about possible acquisitions to enhance the group’s product range.

It has said already that it has about €1 billion with which it could fund an acquisition, but the problem is that a number of other middle ranking companies such as Beam and Davide Campari are also scouring the market for significant buys.

None will wish to become embroiled in a bidding contest.