Rémy Cointreau

Rémy Cointreau has released the second part of its FY25/26 results:

- Sales, as a recap, came in at €935.3m, in line with target, up +0.2% organic (-5.0% reported, on a -5.2% FX impact).

- Current Operating Profit (COP) reached €165.4m (-11.5% organic), above the consensus of €162.3m; margin at 17.7% vs 17.4% expected (+0.3pt).

- Net profit (group share) came in at €78.7m, below the expected €82.4m. Excluding non-recurring items, net profit was €89.2m, above the adjusted consensus of €83.9m.

- Net debt to EBITDA stood at 3.22x, better than the consensus estimate of 3.29x.

- FCF improved to €53.8m, with cash conversion at 27% (vs 10% in 2024-25).

- Dividend cut to €0.75 per share (€0.50 cash plus €0.25 in cash or shares), down from €1.50 in 2024-25.

Divisional COP breakdown:

Cognac reached €141.5m vs €135.3m expected, Liqueurs & Spirits €43.1m vs €46.8m expected.

FY26/27 guidance:

- Return to sustainable organic sales growth, strengthening progressively through the year.

- Slight organic improvement in current operating margin, with the COP outlook integrating an estimated €20m of customs duties (vs around €15m in 2025-26).

- Leverage (net debt/EBITDA) targeted below 3.5x at March 2027.

- Negative full-year currency effect expected of -€15m to -€20m on sales and -€5m to -€8m on COP.

Mid-term guidance:

- New RC Forward plan, a three-year transformation targeting around €100m of value creation by 2028-29 by optimizing procurement, improving distribution networks, and doubling sales in emerging markets and travel retail. Detailed medium-term objectives to be presented in November 2026.

COP came slightly above expectations, and the FY26/27 guidance points to improving sales and profit, which is supportive. This is partially offset by the dividend cut and reported net profit below expectations, so we expect a flat to negative market reaction.

Expert Opinion: 
The massive drop in the share price over the last 4 ½ years was linked to adverse momentum (tariffs war with the US and China, slowdown in China with crackdown on foreign luxury product, concerns regarding alcohol consumption overall notably with weight loss drugs....).  The numbers went down, and so did the valuation ratios (from north of 30x in the 2010s to 25x for PE26 and 17.7x and 15.6x for PE27 and PE28, respectively).

Assuming there is no structural change in the consumption of alcohol (a very debatable question), we are getting closer to buying level.  We actually like the announcement of another restructuring plan, while the target of an organic growth this year and a further improvement of operating margin is encouraging.

There is one issue, nonetheless: the group still needs to finance its massive inventories, and an increased rate may increase financial charges. Moreover, we expect the consensus will still be revised downward. The guidance in terms of organic growth is vague and unsubstantiated, and we expect consensus that stands at c 5% will be tempted to further cut its 2026/27 numbers. 

In all, it might be too early to buy unless you have a long-term investment horizon, but Rémy Cointreau should definitely be on your radar. 

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