Remy Cointreau has reported higher-than-expected annual profits, helped by strong demand for its premium cognacs in China, and predicted more earnings growth this year.
The maker of Remy Martin cognac and Cointreau liqueur said its strategy of selling higher-priced spirits to boost profit margins was delivering strong results.
The company also said today that it was raising its medium-term profitability forecasts.
Remy has been focusing on selling spirits priced at $50 a bottle or more, as part of a strategy that has benefited from a rebound in Chinese demand.
Remy's strategy has differed from that of rival Pernod Ricard, which has launched less expensive brands in China.
The private consumption of drinks and spirits has been recovering in China, offsetting the impact from the country's anti-corruption crackdown over the past few years which had hit sales of premium brand drinks.
Remy Cointreau added it aimed to increase operating profits on a like-for-like basis in the current financial year that started on April 1.
Operating profits for the year ended March 31 rose to €236.8m. This translated into a margin of 22% of sales at constant exchange rates and scope, marking a gain of 1.3 percentage points from the previous year.
This was above the consensus of analysts' forecasts for profits of €235.5m, and a prediction for organic profit growth of 12.9%.
Remy Martin cognac, which makes 86% of group profits, achieved a margin of 26.9% of sales, representing an organic increase of 1.3 percentage points.
Demand was strong in Greater China, Singapore and Japan as well as the US, Russia, and in travel retail outlets.
Remy Cointreau said it now expected a cumulative increase of 2.4-3 percentage points in current operating margin on a like-for-like basis, up from a previous target of 0.8-1.8 points, for the financial years up to 2020.
Remy Cointreau's stock market valuation is closer to that of many luxury good stocks, rather than food and drinks stocks.
