Remy Cointreau Sa · EURONEXT:RCO
Remy Cointreau Sa — Remy Cointreau Sa Ord — FY2019/20 Earnings Presentation
54 slides from Remy Cointreau Sa's earnings presentation, Jun 4, 2020
Slide 1: 2019/20 Annual Results and Strategic Roadmap
2019/20 Annual Results and Strategic Roadmap J U N E 4 th, 2 0 2 0
Slide 2: Introduction
Introduction MARC HERIARD-DUBREUIL, PRESIDENT
Slide 3: 2019/20: a singular year
2019/20: a singular year 3
Slide 4: 2019/20: a singular year
2019/20: a singular year CHANGE Ending March, in €m 2019/20 Reported Organic Sales 1,024.8 -9.0 % -11.2 % of which Group Brands 997.3 -4.0 % -6.3 % Current Operating Profit 215.1 -18.6 % -22.0 % of which Group Brands 237.0 -13.6 % -17.0 % Current operating margin 21.0 % -2.5 pt -2.9 pt Net profit (G
Slide 5: Business Review
Business Review E R I C VA L L AT, C H I E F E X E C U T I F O F F I C E R
Slide 6: Key financial indicators
Key financial indicators Group Brands sales down 6.3% in organic terms (-4.0% on a reported basis): • 2019/20 affected by a number of headwinds: the COVID-19 pandemic, threats of import taxes in the US, geopolitical instability, as well as the consequences of decisions taken by the Group, including
Slide 7: Key non-financial achievements
Key non-financial achievements 100% sustainable agriculture in Cognac Rated number 1 by EthiFinance among French mid-cap companies (Gaïa index) B-Corp: Bruichladdich Distillery certified B corporation 7
Slide 8: Sales Growth by Product Division
Sales Growth by Product Division House of Liqueurs & Group Partner Total Rémy Martin Spirits Brands Brands Group 0% -5% (-0.3% excluding technical factors) -10% (-2.8% excluding (-3.8% excluding technical factors) technical factors) -15% (-3.0% excluding technical factors) -20% -25% -30% (-4.4% excl
Slide 9: Breakdown of Group sales
Breakdown of Group sales By Division By Region Liqueurs & Americas Spirits 45% Asia 25% Pacific 31% Partner Brands 3% Europe, Middle House of Rémy East & Africa Martin 24% 72% 9
Slide 10: Breakdown by region
Breakdown by region Group Brands Rémy Martin Liqueurs & Spirits €735.5M €261.9M Asia Pacific Asia Pacific 12% Americas 39% Americas 45% 46% Europe Middle East & Europe, Middle East Africa & Africa 15% 43% 10
Slide 11: Current Operating Profit
Current Operating Profit Reported decline: -18.6% (€m) Currency Volume/ Price/ A&P Others Mix Mix +9.1 -58.5 264.1 +11.5 +1.5 -12.6 215.1 Organic: -22.0% - €58.1m March 19 March 20 COP/Sales: 23.5% COP/Sales: 21.0% (Org: 20.6%) 11
Slide 12: Net Profit
Net Profit (€m) Net profit excluding non-recurring items Net profit Group share Reported -26.9% Reported -28.8% -29.9% organic change -31.7% organic change 169.9 159.2 124.2 113.4 March 19 March 20 March 19 March 20 12
Slide 13: House of Rémy Martin
House of Rémy Martin Organic sales decline of 7.5% (volumes -10.1%) Sales Asia Pacific (in €millions) • Double-digit growth in Mainland China +10.0%* +13.2%* +11.9%* -7.5% more than offset by weakness in South East Asia and Travel Retail Asia 900 851.9 760.0 774.4 735.5 Americas 750 707.5 • US sales
Slide 14: Marketing initiatives
Marketing initiatives LAUNCH OF REMY MARTIN NEW GLOBAL CAMPAIGN TEAM UP FOR “TERCET” EXCELLENCE 14
Slide 15: Marketing initiatives
Marketing initiatives LOUIS XIII LOUIS XIII LAUNCHES TIME COLLECTION 1900 ITS FIRST E-BOUTIQUE IN THE UK TRIBUTE TO CITY OF LIGHTS 15
Slide 16: House of Rémy Martin
House of Rémy Martin Current operating profit (€m) Reported decline: -15.3% Currency Volume/ Price/ A&P Others Mix Mix +6.8 -40.4 235.6 +10.7 -1.8 -11.3 199.5 Organic -18.2% - €42.9m March 19 March 20 COP/Sales: 30.4% COP/Sales: 27.1% (Org: 26.9%) 16
Slide 17: Liqueurs & Spirits
Liqueurs & Spirits Organic sales decline of 3.0% (volumes -3.4%) Cointreau • Robust performance in the Americas was mitigated by weakness in EMEA and Asia Pacific Sales (in €millions) Metaxa +1.3%* -1.0%* +4.0%* -3.0% • Weakness in the EMEA (changes in RTM and a poor performance in Travel Retail); p
Slide 18: Marketing initiatives
Marketing initiatives COINTREAU METAXA: THE BOTANIST LAUNCH OF “LE COCKTAIL SHOW” INTERNATIONAL EXPANSION NEW COMMUNICATION CAMPAIGN COMMUNICATION PLATFORM WITH THE CLUMSIES BAR “WILD, A STATE OF MIND” 18
Slide 19: Liqueurs & Spirits
Liqueurs & Spirits Current operating profit (€m) Reported decline: -3.5% Currency Volume/ Price/ A&P Others Mix Mix +2.5 -5.7 38.8 +2.6 -1.4 +0.7 37.5 Organic - 9.9% - €3.9m March 19 March 20 COP/Sales: 14.7% COP/Sales:14.3% (Org: 13.6%) 19
Slide 20: Partner Brands
Partner Brands Organic sales decline of 68.7% (volumes -70.7%) • Sales decline largely due to the termination Sales (in €millions) of sizable partner brand distribution contracts in Czech republic, Slovakia and -14.2%* -10.4%* -12.7%* -68.7% 150 the US (€56M impact) • In line with Group’s strategy o
Slide 21: Partner Brands
Partner Brands Current operating profit (€m) • COP decline is the consequence of the COP (in €millions) revenue evolution (EUR5M hit from the +175.7%* -7.2%* -132.0% termination of contracts) 8,0 -72.4%* 6,0 5.3 4,9 4.9 4,0 2.0 2,0 -1.7 0,0 March March March March March 2017 2018 2019 2019 2020 Prof
Slide 22: Financial Results
Financial Results L U C A M A R O T TA , C H I E F F I N A N C I A L O F F I C E R
Slide 23: Current Operating Profit
Current Operating Profit CHANGE Ending March, in €m 2019/20 2018/19 Reported Organic Net Sales 1,024.8 1,125.9 -9.0% -11.2% Gross Profit 676.9 710.9 -4.8% -7.3% • in % 66.0% 63.1% +2.9pts +2.8pts • Sales and marketing expenses (355.0) (346.0) +2.6% +0.2% • Administrative expenses (106.8) (100.7) +6.
Slide 24: Current Operating Margin
Current Operating Margin Reported COP/Sales : -2.5 pts +2.8 pts -1.9 pts -3.8 pts 23.5% +0.4 pt 0.0 pt 21.0% Organic COP/Sales: -2.9 pts March 2019 Gross A&P Distribution/ Currency Scope March 2020 COP/Sales Margin others COP/Sales 24
Slide 25: Net profit
Net profit CHANGE Ending March, €m 2019/20 2018/19 Reported Organic Current Operating Profit 215.1 264.1 -18.6% -22.0% Other operating income (expenses) (19.7) 1.7 - - Operating profit 195.5 265.8 -26.5% -29.6% Net financial income (charge) (28.0) (32.5) - - Pre-tax profit 167.5 233.3 -28.2% -31.5%
Slide 26: Non-recurring items
Non-recurring items Ending March, €m 2019/20 2018/19 Net profit – Group share 113.4 159.2 Westland’s goodwill write-off 18.8 - Non-recurring tax items (2.5) 0.1 Net profit from discontinued operations, halted or sold (6.4) - Expense on vendor loan (financial charge) - 5.2 Disposal of the stake in th
Slide 27: Net debt/ Cash Flow
Net debt/ Cash Flow Ending March, in €m 2019/20 2018/19 Change Opening net financial debt (1 April) (343.3) (282.8) (60.5) Gross operating profit (EBITDA) 252.4 298.1 (45.6) WCR of eaux-de-vie and spirits in ageing process (118.9) (118.1) (0.8) Other working capital items 45.9 (47.3) 93.2 Capital ex
Slide 28: Net financial expenses
Net financial expenses Ending March, €m 2019/20 2018/19 Gross debt servicing costs (12.7) (13.7) Net currency gains (losses) (4.7) (4.0) Other financial expenses (net) (10.6) (14.8) - o/w accrued interest and expense on vendor loan - (5.2) Net financial income (charges) (28.0) (32.5) 28
Slide 29: Foreign exchange
Foreign exchange Hedging impact 1.19 1.18 1.16 1.17 1.16 1.11 Hedged rate €/$ Average €/$ 1.11 1.10 2016/2017 2017/2018 2018/2019 2019/2020 March March March March 29
Slide 30: Foreign exchange
Foreign exchange Hedging impact 2015/ 2016/ 2017/ 2018/ 2019/ 2020/ 16 17 18 19 20 21E Average EUR/USD exchange rate 1.10 1.10 1.17 1.16 1.11 1.14 Average EUR/USD hedged rate 1.23 1.11 1.19 1.18 1.16 1.15 Total sales impact (in €m) 82.7 (5.7) (48.9) 1.5 24.5 (20.0) Total COP impact (in €m) 12.9 23.6
Slide 31: Balance sheet at 31 March 2020
Balance sheet at 31 March 2020 (€m) March in % March in % March in % March in % 2020 2019 2020 2019 Non-current Shareholders’ assets 941 34% 924 35% equity 1,403 50% 1,426 54% Current and Current 1,579 57% 1,522 58% Non-current assets 666 24% 677 26% liabilities o/w inventories 1,364 49% 1,246 47% G
Slide 32: ROCE
ROCE 29.3% 23.6% 22.6% 21.5% 18.6% 18.3% 18.2% 16.7% 16.5% House of Remy Martin Liqueurs & Spirits Group Brands Partner Brands Group -21.9% 2018/19 2019/20 32
Slide 33: Post closing events
Post closing events • 30 April 2020 Acquisition de la Maison de Cognac J.R. Brillet The House of Rémy Martin will integrate around fifty hectares of vineyards located in Grande Champagne and Petite Champagne and will welcome the cognac brand J.R Brillet within its portfolio. Belle de Brillet, which
Slide 34: Dividends
Dividends As already announced, an ordinary dividend of 1.00 euro per share, will be put to a shareholders’ vote at the general assembly on 23 July 2020. It will offer an option to pay the dividend in cash or in shares for the entire dividend distributed. Shares will trade ex-dividend on 28 July 202
Slide 35: 2020/21 Outlook
2020/21 Outlook E R I C V A L L AT, C H I E F E X E C U T I F O F F I C E R
Slide 36: Covid-19: the measures taken by the Group
Covid-19: the measures taken by the Group Solidarity actions: - In China: donation of 1.2M yuan to the SSCL foundation for the purchase of protective medical equipment - In France: donation of alcohol by Cognac, Angers and Trièves production sites to make hand sanitizer. Rémy Martin also donated 8,0
Slide 37: 2020/21 Outlook
2020/21 Outlook A year of two halves, largely impacted by the Covid-19 pandemic THE REMY COINTREAU GROUP NOW ANTICIPATES: • Fiscal Q1 sales to decline by around 45% in organic terms (versus a 50% to 55% organic decline previously), thanks to more favourable spirits consumption trends in the US (off-
Slide 38: Strategic Roadmap
Strategic Roadmap E R I C V A L L AT, C H I E F E X E C U T I F O F F I C E R
Slide 39: Our long-term vision remains unchanged
Our long -ter m vision remains unchang ed BECOME THE WORLD LEADER OF EXCEPTIONAL SPIRITS 39
Slide 40: Our long-term vision fits our purpose
O u r l o n g - t e r m v i s i o n r e m a i n s u n ch a n g e d … because it fits our purpose! "Rémy Cointreau cares for the terroirs that are essential to its Maisons and cultivates the savoir- faire of its people, in order to share with its clients exceptional spirits and sensory experiences. U
Slide 41: Our long-term vision fits our brands and spirits
O u r l o n g - t e r m v i s i o n r e m a i n s u n ch a n g e d … because it fits our brands and spirits! COGNAC SINGLE MALT LIQUEUR HIGH-END HIGH-END HIGH-END WHISKY BROWN RUM CRAFT GIN BRANDIES Louis XIII Rémy Martin PHD Malts Cointreau Mount Gay The Botanist St-Rémy Westland Metaxa Domaine des
Slide 42: Our long-term vision makes sense
O u r l o n g - t e r m v i s i o n r e m a i n s u n ch a n g e d … b e c a u s e i t m a ke s s e n s e ! We have a core family shareholder : enables to think long term We value terroirs and time: gives pricing power We craft increasingly sustainable spirits: deserves superior pricing We benefit f
Slide 43: Our long-term vision works
Our lo n g -ter m visio n rema in s un ch a n g ed… b eca use it wo rks ! OVER THE PAST 4 YEARS*, 380 OUR GROUP BRANDS POSTED Exceptional spirits segment 7% AVERAGE ORGANIC SALES GROWTH CAGR2008-2019 : +11% 330 440bps COP MARGIN IMPROVEMENT 280 Index 100 in 2008 230 180 130 Total international spiri
Slide 44: Time to move to the mature phase: improve portfolio management
Time to move to th e ma ture p h a se : imp rove p o r tfo lio ma n a g emen t Assign clear roles to each brand within the portfolio to clarify missions Invest more smartly Customize priorities by brand between volumes, prices and mix to maximize Group’s overall Gross Margin Increase investment capa
Slide 45: Every brand has a role to play
Time to move to th e ma ture p h a se : imp rove p o r tfo lio ma n a g emen t EVERY BRAND HAS A ROLE TO PLAY BUT ONE SIZE DOES NOT FIT ALL FROM PRODUCTION TO COMMERCIAL, A GAME CHANGER LEVERAGE A INVEST GROWING FOCUS ON VOLUMES INCREASE GROUP THE BOTANIST CATEGORY WITH NO PROTECT GROSS GROSS MARGIN
Slide 46: Time to move to the mature phase: refine our value strategy
Time to move to th e ma ture p h a se : refin e o ur va lue stra teg y FROM PUSH TO PULL FROM 2020 ONWARDS 1 FOCUS ON ABSOLUTE RETAIL PRICE PRICE AND LOUIS XIII SUPERIORITY GROSS MARGIN LOOK BEYOND RETAIL PRICE AND IMPROVE PORTFOLIO PORTFOLIO MANAGEMENT MANAGEMENT 50$ LOUIS XIII 46
Slide 47: Time to move to the mature phase: refine our value strategy
Time to move to th e ma ture p h a se : refin e o ur va lue stra teg y FROM PUSH TO PULL FROM 2020 ONWARDS 1 FOCUS ON ABSOLUTE RETAIL PRICE PRICE AND LOUIS XIII SUPERIORITY GROSS MARGIN LOOK BEYOND RETAIL PRICE AND IMPROVE PORTFOLIO PORTFOLIO MANAGEMENT MANAGEMENT 50$ 2 INFUSE CLIENT CENTRIC LOUIS X
Slide 48: Time to move to the mature phase: refine our value strategy
Time to move to th e ma ture p h a se : refin e o ur va lue stra teg y FROM PUSH TO PULL FROM 2020 ONWARDS 1 FOCUS ON ABSOLUTE RETAIL PRICE PRICE AND LOUIS XIII SUPERIORITY GROSS MARGIN LOOK BEYOND RETAIL PRICE AND IMPROVE PORTFOLIO RESPONSIBLE PORTFOLIO MANAGEMENT MANAGEMENT GROWTH 50$ 2 INFUSE CLI
Slide 49: Focus on 4 high-level priorities
Focus on 4 high -level priorities 1- INCREASE VALUE PER CASE P O R T F O L ‘ CENTRIC MODEL 2- IMPLEMENT A REAL CLIENT I O M A N 3- INCREASE VALUE OF KEY LIQUEURS & SPIRITS BRANDS A G E M E N T 4- ACHIEVE RESPONSIBLE GROWTH 49
Slide 50: Sustainable Exception: from principles and achievements to Responsible Growth
# S u s t a i n a b l e E xc e p t i o n i n 2 0 2 5 : f r o m p r i n c i p l e s a n d a ch i e ve m e n t s t o Re s p o n s i b l e G r o w t h PRESERVING OUR TERROIRS, COMMITTING TO OUR PEOPLE, AND RESPECTING THE VALUE OF TIME 100% Sustainable Agriculture: 100% sustainable agriculture & respons
Slide 51: Our growth engines
Our g rowth engines The Direct Selling opportunity The Off-Trade opportunity The high-end Penetration Rate opportunity The Overseas market opportunity The Margarita opportunity 51
Slide 52: A clear ambition over the next 10 years
A clear ambition over the next 10 years BUILD A SUSTAINABLE, PROFITABLE & RESPONSIBLE GROWTH BUSINESS MODEL: 1. NEW BUSINESS MODEL FOR LOUIS XIII FOCUSED ON DIRECT SALES AND BREAKING THE RULES OF THE INDUSTRY 2. INCREASED SHARE OF THE INTERMEDIATES AND XO AT REMY MARTIN 3. LIQUEURS & SPIRITS BRANDS
Slide 53: Ambitious Financial and Non-Financial Targets
A m b i t i o u s F i n a n c i a l a n d N o n - F i n a n c i a l Ta r g e t s GROUP TO ACHIEVE : 72% GROSS MARGIN AND 33% CURRENT OPERATING MARGIN BY 2030* AND 100% SUSTAINABLE AGRICULTURE BY 2025 25% REDUCTION IN CARBON EMISSIONS (scope 1 & 2) & 30% VALUE PER CASE REDUCTION (scope 3) BY 2025 NET
Slide 54: Q&A
Q&A REMY COINTREAU
Remy Cointreau Sa Ord — FY2019/20 Earnings Presentation on 6ix