Remy Cointreau Sa · EURONEXT:RCO
Remy Cointreau Sa — H1 2018/19 Earnings Presentation
36 slides from Remy Cointreau Sa's earnings presentation, Nov 22, 2018
Slide 1: First Half Results 2018/19
First Half Results 2018/19 (half-year ended 30 September 2018) 22.11.18
Slide 2: Introduction
Introduction MARC HERIARD DUBREUIL PRESIDENT 22.11.18 2
Slide 3: Key figures (as of 30 September 2018)
Key figures (as of 30 September 2018) Proforma Proforma Change Pre-IFRS Post-IFRS Reported Organic* 15, 16 & 9 15, 16 & 9 • Sales €571.4m +5.0% +7.7% €527.0m • of which Group Brands €525.1m +5.8% +8.9% €481.5m • Current Operating Profit €138.0m +2.9% +10.1% €138.2m • Current operating margin 24.1% -
Slide 4: Business review
Business review VALERIE CHAPOULAUD-FLOQUET CHIEF EXECUTIVE OFFICER 22.11.18 4
Slide 5: Sustained growth in the first half
Sustained growth in the first half Robust sales growth: +7.7% in organic terms (+5.0% in reported terms) • Excellent performance of Group Brands (+8.9% in organic terms) • Growth driven by Asia-Pacific and the Americas; EMEA in work in progress COP in organic growth of 10.1% (+2.9% in reported terms
Slide 6: Group sales
Group sales @ REMY COINTREAU €m | H1 2018/19 post a ~~ -H12017/18 Organic Currency H1 2018/19 IFRS 15, 16 &9 Reported growth (pre-IFRS 15, 16 & 9): +5.0% 527.0 22.11.18 6
Slide 7: Organic sales growth by division
Organic sales growth by division House of Liqueurs & Group Partner Group Rémy Martin Spirits Brands Brands Total 20,0% 15,0% 11.7% 7.7% 8.9% 10,0% 5,0% 0.8% 0,0% -5,0% -4.5% -10,0% -15,0% -20,0% 22.11.18 7
Slide 8: Breakdown of Group sales
Breakdown of Group sales By Division By Region €571.4m Partner Americas Liqueurs & Brands 40% (-1pt) Spirits 8% (-1pt) 22% (-1pt) Europe/ Asia M. East/ Pacific Africa House of 34% (+6pts) 26% (-5pts) Rémy Martin 70% (+2pts) 22.11.18 8
Slide 9: Breakdown of Group sales
Breakdown of Group sales Group Brands House of Rémy Martin Liqueurs & Spirits €398.0m €127.1m Americas Americas 43% (-3pts) 40% (-1pt) Asia Asia Europe/ Pacific Europe/ Pacific M. East/ M. East/ 14% (+2pts) 44% (+7pts) Africa Africa 13% (-4pts) 46% (-1pt) 22.11.18 9
Slide 10: Current Operating Profit
Current Operating Profit Reported growth: +2.9% (€m) Volume/ Price / Currency Scope A&P Others Mix Mix +21.8 -10.5 -11.1 +13.4 138.0 138.2 134.1 -9.6 0.0 Organic +10.1% 124,5 + €13.5m Sept. 17 Sept. 18 Sept. 18 Pre IFRS Pre IFRS Post IFRS 15, 16 & 9 15, 16 & 9 15, 16 & 9 COP/Sales : 24.6% COP/Sales
Slide 11: Net profit
Net profit (€m) Net profit excluding non-recurring items Net profit Group share Reported -3.1% Reported -4.3% +7.2% organic change +6.2% organic change 90.3 87.5 89.6 89.2 85.4 87.5 Sept. 17 Sept. 18 Sept. 18 Sept. 17 Sept. 18 Sept. 18 Post IFRS Post IFRS 15, 16 & 9 15, 16 & 9 22.11.18 11
Slide 12: House of Rémy Martin
House of Rémy Martin • Organic sales growth of 11.7% (volumes +6.4%) Asia Pacific Sales (in €millions) • Strong growth, led by Greater China, -3.1%* +5.1%* +15.4%* +11.7%* Singapore, Japan and Travel Retail Asia 450 398.0 367.0 359.6 322.5 Americas 313.1 300 • Solid growth in the US, amid good cogna
Slide 13: Rémy Martin
Rémy Martin The House of Rémy Martin in Chengdu Limited edition VSOP and App “ARt by Rémy Martin” with Matt W. Moore The House of Rémy Martin in Moscow The House of Rémy Martin in London 22.11.18 13
Slide 14: Louis XIII
Louis XIII Party “100 Years” in Singapore Party “100 Years” in Toronto Party “100 Years” in London 22.11.18 14
Slide 15: House of Rémy Martin
House of Rémy Martin Current operating profit (€m) Reported growth: +3.5% Currency Volume/ Price / A&P Others Mix Mix +20.2 -9.7 -10.8 +13.3 119.5 119.5 115.5 -9.0 Organic +11.3% + €13.0m Sept. 17 Sept. 18 Sept. 18 Pre IFRS Pre IFRS Post IFRS 15, 16 & 9 15, 16 & 9 15, 16 & 9 COP/Sales: 31.5% COP/Sal
Slide 16: Liqueurs & Spirits
Liqueurs & Spirits • Organic sales growth of 0.8% (volumes -4.1%) Cointreau • In an investment phase (new campaign); Sales (in €millions) improvement expected in H2 • Robust growth in the UK and in “ new frontier ” -8.3%* +5.1%* -4.5%* +0.8%* markets (China, Russia) 150 134.8 130.1 129.2 127.1 121.9
Slide 17: Liqueurs & Spirits
Liqueurs & Spirits “Margarita Loves Cointreau” campaign New Port Charlotte bottle and #WEAREISLAY campaign 22.11.18 17
Slide 18: Liqueurs & Spirits
Liqueurs & Spirits Current operating profit (€m) Reported decline: -8.2% Currency Volume/ Price / A&P Others Mix Mix +1.6 -0.7 22.5 -0.5 -2.3 +0.0 20.6 20.6 Organic -6.0% - €1.4m Sept. 17 Sept. 18 Sept. 18 Pre IFRS Pre IFRS Post IFRS 15, 16 & 9 15, 16 & 9 15, 16 & 9 COP/Sales : 17.4% COP/Sales: 16.2
Slide 19: Partner Brands
Partner Brands • Organic sales decline of 4.5% (volumes -10.3%) Sales (in €millions) • Termination of two new Partner Brands’ distribution contracts (Campari in Czech -8.3%* -3.1%* -14.3%* -4.5%* 80 Republic/Slovakia and Russian Standard in Travel Retail) 57.6 56.0 60 • Success of a one-off promotio
Slide 20: Partner Brands
Partner Brands • Current operating profit: €2.8m (+14.4% in organic terms) ROC • COP growth largely driven by mix benefits (en millions €) and the one-off promotional operation in the US 5 +41.2%* -15.8%* -8.3%* +14.4%* 4 3.3 2.7 2.8 2.8 3 2.5 2 1 0 Sept Sept Sept Sept Sept 2015 2016 2017 2018 2018
Slide 21: Financial results
Financial results LUCA MAROTTA CHIEF FINANCIAL OFFICER 22.11.18 21
Slide 22: Current Operating Profit
Current Operating Profit Proforma Pre-IFRS 15, 16 & 9 2018 Reported Organic Post-IFRS (€m) 2018 2017 change change 15, 16 & 9 Net Sales 571.4 544.4 +5.0% +7.7% 527.0 Gross Profit 385.3 365.8 +5.3% +9.1% 329.1 in % 67.4% 67.2% +0.2pt +0.9pt 62.5% Sales and marketing expenses (204.0) (191.1) +6.8% +8.
Slide 23: Current Operating Margin
Current Operating Margin Proforma Pre-IFRS 15, 16 & 9 Reported COP/Sales : -0.5 pt +0.9 pt -0.4 pt +0.1 pt -1.1 pt 0.0 pt 24.6% 24.1% Organic COP/Sales: +0.6 pt Sept. 2017 Gross A&P Distribution/ Currency Scope Sept. 2018 COP/Sales Margin others COP/Sales (pre IFRS 22.11.18 15, 16 & 9)23
Slide 24: Net profit
Net profit Pre-IFRS Post IFRS 15, 16 & 9 15, 16 & 9 (€m) 2018 2017 2018 Current Operating Profit 138.0 134.1 138.2 Other operating income (expenses) 2.0 (1.8) 2.0 Operating profit 140.0 132.3 140.3 Net financial income (charge) (19.6) (8.8) (16.7) Pre-tax profit 120.4 123.5 123.6 Taxes (35.0) (34.5)
Slide 25: Non-recurring items
Non-recurring items Pre-IFRS Post-IFRS 15, 16 & 9 15, 16 & 9 (€m) 2018 2017 2018 Net profit – Group share 85.4 89.2 87.5 Provision for reorganisation of distribution network (0.0) 1.9 (0.0) Gain on non-core asset disposal (2.1) 0.0 (2.1) Expense on vendor loan (financial charge) 5.2 0.0 5.2 Tax on “
Slide 26: 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) 2018 IFRS 15 IFRS 16 IFRS 9 2018 Net sales 571.4 (44.4) - - 527.0 Cost of sales (186.0) (11.8) - - (197.8) Gross margin 385.3 (56.2) - - 329.1 Sales and marketing expenses (204.0) 56.2 - - (147.9) A
Slide 27: Comparing Pre and Post IFRS 15, 16 & 9 (H1 2018-19)
Current operating margin Comparing Pre and Post IFRS 15, 16 & 9 (H1 2018-19) Gross margin A&P/Sales Distribution & others/ Current operating -5.0 pts -7.6 pts Sales margin +0.5 pt +2.1 pts 67.4% 62.5% 26.2% 23.0% 24.1% 22.5% 20.8% 13.2% Pre-IFRS Post-IFRS Pre-IFRS Post-IFRS Pre-IFRS Post-IFRS Pre-IF
Slide 28: Net debt/Cash flow
Net debt/Cash flow Pre-IFRS Post-IFRS 15, 16 & 9 15, 16 & 9 (€m) 2018 2017 Change 2018 Opening net financial debt (1 April) (282.8) (390.1) 107.2 (282.8) Gross operating profit (EBITDA) 150.9 146.1 4.9 154.8 WCR of eaux-de-vie and spirits in ageing process (28.6) (28.7) 0.2 (28.6) Other working capi
Slide 29: Net financial expenses
Net financial expenses Pre-IFRS 15, 16 & 9 Post IFRS 15, 16 & 9 (€m) 2018 2017 2018 Gross debt servicing costs (6.7) (7.1) (7.2) Net currency gains (losses) (2.8) 0.7 0.6 Other financial expenses (net) (10.1) (2.4) (10.1) - o/w accrued interest and expense on vendor loan (5.2) 2.3 (5.2) Net financia
Slide 30: Foreign exchange: hedging impact
Foreign exchange: hedging impact 1.23 Hedged rate €/$ 1.19 1.19 1.16 1.18 1.17 1.11 1.14 Average rate €/$ 1.10 1.10 2015/2016 2016/2017 2017/2018 2017/2018 2018/2019 March March Sept. March Sept. 22.11.18 30
Slide 31: Currency impact on Sales and COP
Currency impact on Sales and COP ➢ 2018/19 guidance: - €3m on sales (vs. - €10m previously) and - €11m on COP (vs. - €17.7m) 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19E Average EUR/USD exchange rate 1.34 1.27 1.10 1.10 1.17 1.16 Average EUR/USD hedged rate 1.31 1.30 1.23 1.11 1.19 1.18 Total sa
Slide 32: Balance sheet at 30 September 2018
Balance sheet at 30 September 2018 Assets Liabilities (€m) Sept in % Sept in % Sept in % Sept in % 2018 2017 2018 2017 Non- Shareholders’ 879 35% 970 40% 1 477 58% 1 336 56% current equity assets Current 1 494 59% 1 389 58% Current and assets Non-current 592 23% 593 25% liabilities o/w inventories 1
Slide 33: Key events during the half-year
Key events during the half-year • 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 leve
Slide 34: Post-closing events
Post-closing events • 18 Octobre 2018 Rémy Cointreau was ranked 3rd by Gaïa Rating, EthiFinance’s CSR rating agency, among the mid-cap companies (listed in France and in Europe) whose turnover is > €500m. • 26 Octobre 2018 Standard & Poor’s upgraded the rating of the Rémy Cointreau Group to BBB- (In
Slide 35: 2018/19 full-year outlook
2018/19 full-year outlook • A very solid first half-year 2018/19, above Group’s internal expectations • Rémy Cointreau confirms its guidance of growth in Current Operating Profit over the 2018/19 fiscal year, assuming constant exchange rates and scope (proforma Pre-IFRS 15, 16 & 9) 22.11.18 35
Slide 36: Q&A
22.11.18 Q&A