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LONDON (Reuters) -Remy Cointreau's shares hit their lowest in eight years on Wednesday as a first-quarter sales miss on spreading problems in the U.S. and Asia added to gloomy sentiment around the cognac maker.
Shares in the producer of Remy Martin cognac and Cointreau liqueurs slipped more than 3% on the news that first-quarter organic sales had fallen 15.6%, compared to a 13.6% drop expected by analysts.
The stock hit its lowest since 2016, dragged down by concerns around downturns from the U.S. to Asia, and the threat of tariffs on EU brandy from Beijing amid an EU-China trade dispute.
Chief financial officer Luca Marotta however said that nothing had significantly changed, and the company kept its full-year guidance unchanged despite some worse-than-expected trends during the first quarter.
"Is it enough to change the guidance? No," he said, adding the year was unbalanced between the first and second halves. "We believe in the guidance."
While the second quarter may not be an improvement on the first, he said the company expected a gradual improvement in the second half led mostly by the U.S., one of its most important markets alongside China.
US PROBLEMS SPREAD
Remy had already warned that its first half was likely to be tough amid ongoing problems in its two key markets for cognac. The brandy makes up around 70% of its sales.
Its shares later recovered some lost ground to stand just 0.6% lower by 0942 GMT, reflecting that the sales decline was well-flagged and some bright spots in Remy's performance, Fred Mahon, a fund manager at Remy investor Church House, said.
Crucially, a 12.2% sales decline at Remy's cognac unit was well ahead of analyst expectations and its performance in China was ahead of some peers.
The unit has been hit in the U.S. by falling demand, destocking by retailers and wholesalers, and aggressive promotions by rivals.
These issues now also hit the company's smaller liqueurs and spirits division, housing brands such as Cointreau, The Botanist gin and Bruichladdich whisky.
"These are certainly results of a company going through a really tough patch," Mahon said, adding however Remy was well-positioned for the longer term.
(Reporting by Emma Rumney; Editing by Varun H K and Janane Venkatraman, Miral Fahmy and Jan Harvey)
