(Bloomberg) -- Despite a cognac revival in China that’s boosting Remy Cointreau SA’s sales, the French distiller says its full-year profit will be dented by currencies losing ground to the strong euro.
Earnings will be cut by 17 million to 18 million euros ($21 million to $22 million) this year from the deterioration of the U.S. and Hong Kong dollars and the Chinese yuan against the euro, Chief Financial Officer Luca Marotta said.
Currency fluctuations over the past two months were “very brutal,” Marotta said on a call with investors Friday. The negative impact of foreign exchange on sales in the nine-month period through December was about 22.6 million euros, he said. The stock fell as much as 4.3 percent to 105.9 euros in Paris trading, paring earlier gains after the company reported third-quarter sales growth that surpassed analysts’ estimates.
Revenue from Remy Cointreau’s cognac arm, which includes Remy Martin, would have been stronger if not for the high basis of comparison from a year earlier and the late timing of the 2018 Lunar New Year, the company also said. Adjusted for those effects, the company said organic growth for the quarter would have been around 6 percent.
While Marotta said he remained bullish on future sales performance, Remy Cointreau joins a number of other companies warning of a currency effect on full-year earnings from the stronger euro, including rival distiller Pernod Ricard SA and brewer Heineken NV.
Other highlights include:
- Sales rose 5.5 percent on an organic basis in the third quarter; analysts on average expected 4.5 percent growth
- Total sales rose 3.2 percent on an organic basis, beating the 3 percent average estimate
- Remy Cointreau confirmed its forecast for growth in full-year operating profit, excluding currency effects
- The company also benefited from solid growth in the U.S., Russia, Central Europe, Africa and the U.K.
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