* Q1 sales 214.8 mln euros, down 5.7 pct like-for-like
* Q1 cognac sales down 15 pct l-f-l vs 32 pct fall in Q4
* Remy keeps full-year goals, shares up 4 pct
* Cognac shipments to China could pick up from Q3 - CFO
(Recasts with CFO comments, shares, analysts)
By Dominique Vidalon
PARIS, July 18 Spirits group Remy Cointreau
said it expects demand for cognac in China to pick up
later this year, after blaming a Chinese government crackdown on
ostentatious spending for another drop in group sales in the
The French maker of Remy Martin cognac and Cointreau liqueur
appeared optimistic on the current year on Friday, predicting
that cognac shipments to China could pick up from the third
quarter. Its shares rose 4 percent, reversing earlier losses.
Cognac accounts for 80 percent of the company's operating
profit, with China contributing half of cognac profits.
Weakness in China led to the abrupt resignation of CEO
Frederic Pflanz in January after the company issued a profit
Cognac sales slumped again in the first quarter of the
fiscal year, by 15 percent year-on-year, the company said on
Friday, although that was better than a 32 percent drop in the
previous three months, helped by robust demand for spirits in
the United States, Japan and other parts of Asia.
The group kept its goal of achieving organic growth in sales
and in current operating profit in its 2014-15 financial year
which began on April 1.
"Growth will most probably be focused on the second half of
the year," finance chief Luca Marotta told analysts.
Remy Cointreau's focus has been on deluxe drinks like Louis
XIII cognac, which sells for 2,500 euros ($3,400) a bottle. This
has made it more vulnerable to China's anti-corruption crackdown
on gift-giving and personal spending by civil servants than
rivals such as Diageo and Pernod Ricard.
Remy Cointreau said group sales overall reached 214.8
million euros in the three months to June 30. Like-for-like
sales fell 5.7 percent from a year earlier, against a 16 percent
drop in the fourth quarter of fiscal year 2013/14.
The figures were better than consensus expectations of a 7.3
percent organic decline to 212.4 million euros, Bryan Garnier
analysts said in a note, keeping a "buy" rating.
On the bright side, the liqueurs and spirits division
recorded an 11.3 percent rise in like-for-like sales, bolstered
by solid demand for Cointreau in Japan, Eastern and Central
Europe and in travel retail, while cognac demand was good in
At 1002 GMT, Remy shares were up 3.85 percent at 65 euros,
outperforming a 0.2 percent decline in the Stoxx Europe Food &
Sales at the cognac division were hit by continued
destocking in China, tough comparisons with very strong demand
in the United States a year ago and continued economic weakness
De-stocking in China however continued at a slower pace than
in the second-half 2013/14, Marotta said.
RECOVERY ON TRACK
He reiterated Remy's assumption that sales from wholesalers
to retailers, restaurants and bars would stabilize in China in
the fiscal year that began on April 1.
If that happened Remy's cognac division could return to
growth at a mid-single to low double-digit rate in China.
"Recent trends and the commercial performance of the
first-quarter show the recovery scenario is on track," said
Gilbert Dupont analysts in a note.
Despite difficulties in China, Marotta reiterated that Remy
was sticking to its focus on selling super-premium brands.
"We do not think the growth of the Chinese market will be
driven by lower (priced) products. That is not our scenario," he
Remy Cointreau named Valerie Chapoulaud-Floquet, a former
L'Oreal and Louis Vuitton executive, as its
new CEO last month.
Her arrival in September "introduces an unknown factor, but
her background suggests a continuing focus on super-premium
products," Nomura analysts said in a note.
($1 = 0.7396 euros)
(Reporting by Dominique Vidalon; Editing by Pravin Char and