Remy Cointreau Sa · EURONEXT:RCO
Remy Cointreau Sa — FY2018/19 Earnings Presentation
49 slides from Remy Cointreau Sa's earnings presentation, Jun 6, 2019
Slide 1: Full-Year Results 2018/19
Full-Year Results 2018/19 (year ended 31 March 2019) 6 June 2019
Slide 2: Introduction
Introduction MARC HÉRIARD DUBREUIL PRESIDENT Annual results as of 31 March 2019 2
Slide 3: 2018/19: a record year
2018/19: a record year Key figures ending March 2019 Proforma Proforma Change Pre-IFRS Post-IFRS Reported Organic* 15, 16 & 9 15, 16 & 9 • Sales €1,216.5m 7.9% 7.8% €1,125.9m • of which Group Brands €1,128.6m 9.9% 9.8% €1,038.8m • Current Operating Profit €263.6m 11.3% 14.2% €264.1m • Current operat
Slide 4: Business review
Business review VALÉRIE CHAPOULAUD-FLOQUET CHIEF EXECUTIVE OFFICER Annual results as of 31 March 2019 4
Slide 5: Excellent annual performance
Excellent annual performance Group Brands sales up 9.8% in organic terms (+9.9% on a reported basis): • The House of Rémy Martin (+11.9%) fueled by remarkable growth across all geographical areas • Asia-Pacific continued strong growth in Greater China and the countries of Southeast Asia • Americas c
Slide 6: Sustainability: accelerating!
Sustainability : accelerating ! Terroirs… • Sustainable agriculture: A record year for Rémy Martin : over 94% of AFC’s winegrowing area engaged in HEV (High Environmental Value) programme, 42% have highest HVE 3 status. AFC represents over 90% of Charentes’s HVE 3 certified growers Sustainable agric
Slide 7: Group sales
Group sales €m 1,216.5 1,127.0 1,125.9 Annual results as of 31 March 2019 7
Slide 8: Sales growth by product division
Sales growth by product division 20% 15% 10% 5% 0% -5% -10% -15% -20% Annual results as of 31 March 2019 8
Slide 9: Breakdown of Group Sales
Breakdown of Group Sales (1) By Division By Region €1,216.5m (proforma pre-IFRS) Americas Liqueurs & Partner 39% (=) Spirits Brands 23% (-1pt) 7% (-2pts) Europe/ Asia M. East/ Pacific Africa 34% (+3pts) 27% (-3pts) Rémy Martin 70% (+3pts) Annual results as of 31 March 2019 9
Slide 10: Breakdown of Group sales
Breakdown of Group sales Group Brands Rémy Martin Liqueurs & Spirits €851.9m €276.6m (proforma (proforma Pre-IFRS) Pre-IFRS) Americas Americas 42% (=) 40% (=) Europe/ Europe/ Asia Asia M. East/ M. East/ Pacific Pacific Africa Africa 13% (+2pts) 44% (+2pts) 47% (-2pts) 14% (-2pts) Annual results as o
Slide 11: Current Operating Profit
Current Operating Profit Reported growth: +11.3% (€m) Currency Volume/ Price/ A&P Others Mix Mix +35.0 -19.6 -26.8 +44.9 263.6 264.1 236.8 -6.8 Organic +14.2% + €33.6m March 19 March 19 March 18 proforma Post IFRS COP/Sales: 21.0% COP/Sales: 21.7% COP/Sales: 23.5% (Org: 22.3%) Annual results as of 3
Slide 12: Net profit
Net profit (€m) Net profit Net profit Group share excluding non-recurring items Reported +10.9% Reported +6.0% +16.3% organic change +11.5% organic change 167.8 169.9 157.1 159.2 148.2 151.3 March 18 March 19 March 19 March 18 March 19 March 19 Proforma Post IFRS Proforma Post IFRS Annual results as
Slide 13: House of Rémy Martin
House of Rémy Martin • Organic sales growth of 11.9% (volumes +6.0%) Sales Asia Pacific (in €millions) • Strong growth, led by Greater China, +3.2%* +10.0%* +13.2%* +11.9%* Southeast Asia and Travel Retail Asia 900 851.9 760.0 774.4 Americas 750 707.5 647.8 • Strong momentum across the region; 600 v
Slide 14: Marketing initiatives
Marketing initiatives Rémy Martin LOUIS XIII Limited Edition VSOP And App “ARt by Rémy Martin” “Think a Century Ahead” campaign and With Matt W. Moore Smart Decanter Brand awareness and image The ephemeral Houses of Rémy Martin “100 YEARS” parties around the world Brand Education 14
Slide 15: House of Rémy Martin
House of Rémy Martin Current operating profit (€m) Reported growth: +15.3% Currency Volume/ Price/ Others A&P Mix Mix +27.0 -13.3 -21.5 +44.4 235.6 235.6 204.4 -5.3 Organic + 17.9% + €36.6m March 18 March 19 March 19 proforma Post IFRS COP/Sales: 26.9% COP/Sales: 27.7% COP/Sales: 30.4% (Org: 28.3%)
Slide 16: Liqueurs & Spirits
Liqueurs & Spirits • Organic sales growth of 4.0% (volumes -1.6%) Cointreau • Steady progress throughout the year, with “The Art of the Sales (in €millions) Mix” campaign starting to bear fruit in H2 Metaxa -1.5%* +1.3%* -1.0%* +4.0%* 350 • Slight decline in 2018/19, due to the brand’s accelerated m
Slide 17: Marketing initiatives: Cointreau
Marketing initiatives: Cointreau LIMITED EDITION IN COLLABORATION WITH “THE MARGARITA LOVES COINTREAU” THE DESIGN LABORATORY OF CENTRAL CAMPAIGN SAINT MARTINS COLLEGE Annual results as of 31 March 2019 17
Slide 18: Marketing initiatives
Marketing initiatives New Port Charlotte bottle and METAXA St-Rémy #WEAREISLAY campaign AEN CASK No2 French Chardonnay Cask Finish Annual results as of 31 March 2019 18
Slide 19: Liqueurs & Spirits
Liqueurs & Spirits Current operating profit (€m) Reported decline: -9.4% Currency Volume/ Price/ A&P Others Mix Mix +8.0 -5.5 42.8 -7.2 -1.4 +2.1 38.8 38.8 Organic -6.0% - €2.6m March 18 March 19 March 19 proforma Post IFRS COP/Sales: 16.1% COP/Sales:14.0% COP/Sales: 14.7% (Org: 14.5%) Annual result
Slide 20: Partner Brands
Partner Brands • Organic sales decline of -12.7% (volumes -19.7%) • Sales decline mainly due to termination of Sales (in €millions) new partner brand distribution contracts (€15M impact) -8.1%* -14.2%* -10.4%* -12.7%* 150 129.0 • In line with Group’s strategy of gradually refocusing on its proprieta
Slide 21: Partner Brands
Partner Brands • Current Operating Profit: €4.9m • COP decline is the consequence of the COP (in €millions) revenue evolution -7.2%* -22.9%* -72.4%* +175.7%* 8 6.1 6 5.3 4.9 4.9 4 2.0 2 0 March March March March March 2016 2017 2018 2019 2019 Proforma Post IFRS * Organic growth (proforma Pre-IFRS 15
Slide 22: Financial results
Financial results LUCA MAROTTA CHIEF FINANCIAL OFFICER Annual results as of 31 March 2019 22
Slide 23: Current Operating Profit
Current Operating Profit Proforma Pre-IFRS 15, 16 & 9 2019 Reported Organic Post-IFRS Ending March (€m) 2019 2018 change change 15, 16 & 9 Net Sales 1,216.5 1,127.0 7.9% 7.8% 1,125.9 Gross Profit 828.9 760.7 9.0% 9.8% 710.9 in % 68.1% 67.5% +0.6pt +1.2pts 63.1% Sales and marketing expenses (464.3) (
Slide 24: Current Operating Margin
Current Operating Margin Reported COP/Sales: +0.7pt 23.5% +1.2pts +0.1pt +0.0pt -0.7pt 21.7% 21.0% Organic COP/Sales: +1.3pts 2017/18 Gross A&P Distribution/ Currency 2018/19 2018/19 COP/Sales Margin others COP/Sales COP/Sales Proforma Post IFRS Annual results as of 31 March 2019 24
Slide 25: Net profit
Net profit Pre-IFRS Post IFRS 15, 16 & 9 15, 16 & 9 Ending March (€m) 2019 2018 2019 Current Operating Profit 263.6 236.8 264.1 Other operating income (expenses) 1.7 (13.7) 1.7 Operating profit 265.2 223.1 265.8 Net financial income (charge) (35.2) (22.0) (32.5) Pre-tax profit 230.1 201.0 233.3 Taxe
Slide 26: Non-recurring items
Non-recurring items Pre-IFRS Post-IFRS 15, 16 & 9 15, 16 & 9 Ending March (€m) 2019 2018 2019 Net profit – Group share 157.1 148.2 159.2 Other operating income and expenses (1.7) 13.7 (1.7) Expense on vendor loan (financial charge) 5.2 0.0 5.2 Non-recurring tax items 0.1 (10.3) 0.1 Disposal of the s
Slide 27: New IFRS standards: impacts on the P&L
New IFRS standards: impacts on the P&L Proforma Post-IFRS Impacts Pre-IFRS 15, 16 & 9 15, 16 & 9 (€m) March 2019 IFRS 15 IFRS 16 IFRS 9 March 2019 Net sales 1,216.5 (90.5) - - 1,125.9 Cost of sales (387.6) (27.5) - - (415.1) Gross margin 828.9 (118.0) - - 710.9 Sales and marketing expenses (464.3) 1
Slide 28: Comparing Pre and Post IFRS 15, 16 & 9 (2018-19)
Current operating margin Comparing Pre and Post IFRS 15, 16 & 9 (2018-19) Gross margin A&P/Sales Distribution & others/ Current operating -5.0 pts -7.2 pts Sales margin +0.4 pt +1.8 pts 68.1% 63.1% 23.4% 23.0% 23.4% 23.5% 21.7% 16.2% Pre-IFRS Post-IFRS Pre-IFRS Post-IFRS Pre-IFRS Post-IFRS Pre-IFRS
Slide 29: Net debt/Cash flow
Net debt/Cash flow Pre-IFRS Post-IFRS 15, 16 & 9 15, 16 & 9 Ending March (€m) 2019 2018 Change 2019 Opening net financial debt (1 April) (282.8) (390.1) 107.3 (282.8) Gross operating profit (EBITDA) 290.6 261.5 29.1 298.1 WCR of eaux-de-vie and spirits in ageing process (85.6) (35.1) (50.5) (85.6) O
Slide 30: Net financial expenses
Net financial expenses Post IFRS 15, Pre-IFRS 15, 16 & 9 16 & 9 Ending March (€m) 2019 2018 2019 Gross debt servicing costs (12.6) (14.5) (13.7) Net currency gains (losses) (7.7) (2.9) (4.0) Other financial expenses (net) (14.8) (4.6) (14.8) - o/w accrued interest and expense on vendor loan (5.2) 4.
Slide 31: Foreign exchange: hedging impact
Foreign exchange: hedging impact 1.23 Hedged rate €/$ 1.19 1.18 1.17 1.11 1.16 Average €/$ 1.10 1.10 2015/2016 2016/2017 2017/2018 2018/2019 March March March March Annual results as of 31 March 2019 31
Slide 32: Currency impact on Sales and COP
Currency impact on Sales and COP 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20E Average EUR/USD exchange rate 1.27 1.10 1.10 1.17 1.16 1.18 Average EUR/USD hedged rate 1.30 1.23 1.11 1.19 1.18 1.17 Total sales impact (in €m) 30.3 82.7 -5.7 -48.9 +1.5 -20.0 Total COP impact (in €m) 1.0 12.9 23.6 -1
Slide 33: Balance sheet at 31 March 2019
Balance sheet at 31 March 2019 Proforma Pre-IFRS 15, 16 & 9 Assets Liabilities (€m) March in % March in % March in % March in % 2019 2018 2019 2018 Non- Shareholders’ current 886 34% 959 38% equity 1,451 56% 1,408 55% assets Current Current and 1,521 59% 1,396 55% assets Non-current 643 25% 664 26%
Slide 34: ROCE
ROCE 2018 2019 Proforma 2019 Post-IFRS 32.6% 29.3% 29.3% 24.1% 23.1% 22.8% 23.6% 21.9% 20.9% 21.5% 18.3% 18.3% Rémy Martin Liqueurs & Partner Group Spirits Brands Annual results as of 31 March 2019 34
Slide 35: Changes in Capital Employed
Changes in Capital Employed Partner Liqueurs & (€M) Spirits Brands Rémy Martin (+13.5%) (+1.2%) (+16.2%) +24.5 +0.2 1,246.9 -32.9 +143.5 +14.8 1,228.8 1,078.8 +€168.1M +15.6% March 18 Rémy Liqueurs & Partner March 19 IFRS 15 Currency March 19 Martin Spirits Brands Organic Reported and and proforma P
Slide 36: Key events during the year (1)
Key events during the year (1) • 2 July 2018 Signing of a syndicated loan amounting to €100 million, funded by a pool of six banks. This new facility will mature in 5 years (with a possible extension of 2 years) and includes a margin grid between 35bps and 125bps, depending on the Group’s debt level
Slide 37: Key events during the year (2)
Key events during the year (2) • 26 October 2018 Standard & Poor’s upgraded the rating of the Rémy Cointreau Group to BBB- (Investment grade) versus BB+ previously. • 21 December 2018 Signing of a share purchase agreement for the disposal of the distribution subsidiaries in the Czech Republic (Rémy
Slide 38: Post-closing events
Post-closing events • 1 April 2019 Rémy Cointreau sold its stake in Diversa — its 50/50 joint venture in Germany with Underberg — to the Underberg Group. On the same day, Eggers & Franke Group took over the distribution of Rémy Cointreau’s spirits in Germany from Diversa. • 1 April 2019 Effective di
Slide 39: Dividends
Dividends An ordinary dividend of 1.65 euro per share (unchanged compared to last year), will be put to a shareholders’ vote at the general assembly on 24 July 2019. Given the strong growth in annual results, the Board of Directors has also decided to propose an exceptional dividend of 1.00 euros pe
Slide 40: Outlook
Outlook VALÉRIE CHAPOULAUD-FLOQUET CHIEF EXECUTIVE OFFICER Annual results as of 31 March 2019 40
Slide 41: Our ambition: Leader of Exceptional Spirits
Our ambition : Leader of Exceptional Spirits 330 USD50+ spirits segment CAGR2008-2018: +11% 280 Index 100 in 2008 230 180 130 Total international spirits CAGR2008-2018: +5% 80 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total international spirits market USD50+ segment Source: IWSR, Rémy
Slide 42: Contribution of Exceptional Spirits
Contribution of Exceptional Spirits Steady increase in the contribution of Exceptional Spirits (>USD50) to the Group’s total sales 45% 49% 51% 53% 54% 60-65% >USD50 <USD50 55% 51% 49% 47% 46% 35-40% 2014/15 2015/16 2016/17 2017/18 2018/19 Medium-Term Annual results as of 31 March 2019 42
Slide 43: Strong improvement in Gross Margin in past 5Y
Strong improvement in Gross Margin in past 5Y Increased focus on Exceptional Spirits (>USD50) translated into significant Gross Margin (*) expansion 70,0% +4.1pts between 2015 and 2019 68.1% 68,0% 67.5% 66.7% 66,0% 64.0% 64,0% 63.4% 63.1% 61.8% 62,0% 61.4% 59.9% 60,0% 58.2% 58,0% 57.7% 57.1% 56,0% 5
Slide 44: And significant COP Margin gains
And significant COP Margin gains And strong Gross Margin expansion fuelled significant COP Margin (*) improvement +5.5pts between 2015 and 2019 25,0% 23.5% 21.7% 20.7% 21.0% 20.2% 20.6% 20,0% 19.2% 18.4% 17.3% 17.0% 16.2% 15,0% 14.6% 10,0% 5,0% 0,0% Mars 2009 Mars 2010 Mars 2011 Mars 2012 Mars 2013
Slide 45: COP margin consistently beating targets
COP margin consistently beating targets 25,0% Organic gain: +5.0pts between 2015 and 2019 23.5% 21.7% 0.50% 1.30% 1.30% 20,0% 1.50% 16.2% 0.90% 15,0% Organic gain: +2.6pts in 2 years 10,0% 2020 target (+2.4-3.0pts over 3Y) 5,0% achieved 1 year earlier 0,0% COP margin Organic gain Organic gain Organi
Slide 46: COP Margin: upside potential vs. Best-in-Class Peers
COP Margin: still upside potential vs. Best-in-Class Spirits/Luxury Peers 29% 28% 27% 25% 23.5% 23% 21% 19% 17% 15% Rémy Cointreau (*) Average Best Spirits/Luxury Peers (**) Post IFRS (*) Rémy Cointreau’s reported current operating margin (post IFRS 15, 9 & 16) (**) Average current operating margin
Slide 47: New Medium-Term Objectives
New Medium-Term Objectives In an uncertain economic and geopolitical context: ▪ Become the leader of Exceptional Spirits ▪ Increase the contribution of Exceptional Spirits to 60-65% of sales ▪ Gradually drive the Current Operating Margin upwards ▪ Keep investing significantly in strategic A&P and st
Slide 48: 2019/20 Outlook
2019/20 Outlook ▪ 2019/20 to unfold within the framework of the Group's medium-term objectives ▪ Termination of Partner Brands’ distribution contracts: estimated negative impact of €56M on sales (€31M in H1 and €25M in H2; -5pts hit on organic sales growth) and €5M on COP. ▪ Q1: as expected, slight
Slide 49: Questions & Answers
Questions & Answers Annual results as of 31 March 2019 49