UPDATE 2-Remy Cointreau sees champagne shake-out
(Rewrites with managing director's comments)
By Nick Antonovics
PARIS, Nov 27 (Reuters) - French wines and spirits group Remy Cointreau (RCOP.PA) predicted a further shake-out in the 5 billion euro champagne industry as it unveiled in-line first half profits and painted an optimistic view of its future.
Remy Cointreau Managing Director Jean-Marie Laborde said rising grape prices were likely to squeeze smaller players in coming years, leading to the disappearance of minor champagne brands.
He said Remy had doubts about proposals to enlarge champagne's area to seek to head off potential grape shortages.
"There are today in Champagne around 100 million bottles which I consider to be sold badly, which are the own label brands," Laborde told reporters on the margins of a conference to present the firm's first half figures.
"It's clear there will be consolidation among the brands."
The maker of Cointreau liqueur and Remy Martin cognac said on Tuesday first-half net profit fell to 38.1 million euros
($56.62 million) from 75.7 million, as asset sales contributed just 1.1 million euros, down from 42.1 million a year earlier.
Current operating profit rose 5.9 percent to 65.6 million euros, or an unchanged 17.5 percent of sales, despite a rise in marketing spending in Asia where it is building its own distribution network to replace the Maxxium joint venture.
The average forecast of four analysts compiled by Reuters Estimates was for net profit of 36.0 million euros, while five analysts on average forecast operating profit of 67.7 million.
"The performance for the first six months of the year was in line with the guidance for significant organic growth in operating profitability for the year," Remy said in a statement.
Laborde affirmed Remy had practically finished restructuring its portfolio, with only the sale of an armagnac brand pending.
He reaffirmed this meant the group would consider buying another spirits brand if one came along, while stressing this was not a priority. This could be a premium whisky for example.
"I could afford a brand today but am not looking," he said. "I would prefer to wait until we have our own (distribution) network, which is working well."
Remy last year announced plans to pull out of its Maxxium joint venture with Vin & Sprit, Fortune Brands FO.N and Edrington Group.
Laborde said this meant marketing costs would weigh on results in its 2007-08 and 2008-09 financial years but "the year it ends (2009-10) will be spectacular".
Remy said operating profit at its cognac business rose 4.4 percent to 40.4 million euros and was up 14 percent at 26.0 million euros in liqueurs and spirits.
Champagne operating profit halved to 0.7 million euros. "This is not significant compared with the full year which is forecast to be plus 30 percent," Remy said.
(Editing by David Cowell)
((nicholas.antonovics@reuters.com; +33149495182; Reuters messaging: nicholas.antonovics.reuters.com@reuters.net))
($1=.6729 Euro) Keywords: REMYCOINTREAU RESULTS/
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