Remy Cointreau Unsp/Adr

Welcome to the Remy Contreau 2025-2026 third quarter sales presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on the telephone keypad. Now I will hand the conference over to Luca Murata, CFO. Please, sir, go ahead.

Good morning, everyone. Thank you for joining us today. As highlighted in our press release, Q3 sales grew by 2.8 organically, and this result stems from mixed regional trends, mainly driven by, on one end, solid growth in the U.S. for a fourth consecutive quarter, supported by clearly low comps, and improved sequential depressions. They are slightly improving compared to Q2, but less than expected, and they are still negative, talking about the depression in the U.S. In addition, EMEA is back to growth in Q3, driven by both divisions, cognac and liposome spirits. And last but not least, on the other hand, China is relatively resilient, considering the continued challenging markets and excluding an unfavorable calendar effect due to the shift of Chinese New Year's timing, which count for three points in Q3 at group level, i.e. one point if you consider the year-to-date nine-month basis. Let me put everything differently. We would have been flattish over nine months, excluding those technical effects. Q3 sales decline breaks down as follows. A volume increase of 8.7 and 5.9 in price mix effect. Clearly, Q3 sales increase. Largely driven by cognac, mostly in India and China, which is impacted by the performance of the end brands. Looking at the overall sales performance by region, America was up by high single digit over nine months, of which a low to mid single digit growth in the Q3. APAC sales decreased by low double digit over nine months, of which a decrease of low single digit in Q3. This performance is up mid single digit, excluding the negative calendar, changes in the calendar effect, which is eight points, if you consider that at APAC level. In-year decline by no single digit over nine months, but with an increase of high single digits in the last quarter. This was the overall sales performance by region of nine months with a specific touch on the last quarter. Let's do the same thing at least at nine months value depletions at group level. In the U.S., value depletion declined by mid-single digit year-on-year over nine months, including a decline of low to mid single digit in Q3. In China, value depletion were down 18 over nine months year-on-year, including the negative calendar effect in Q3 that waves also in depletion screen. And in EMEA, value depletion decreased by mid single digit year-on-year. So what we can say overall after nine months? As a picture, nine months group value depletion fell by mid to high single digit, more or less minus 7, minus 8, and the performing sell-in trends minus 1.9. Why that? Essentially because of the U.S. restocking from the low basis without increasing the level of stock in absolute value. However, the gap has widened compared to the H1 beyond the U.S. and the calendar effect in China. Global depletion in Q3 were still lacking a bit of momentum. I'll be back also with some absolute value during Q&A session, I'm sure. To conclude on this first slide, we are confirming our full-year organic guidance. We expect the organic full-year sales to be between stable and up low single digits, while we expect organic full-year operating profit to decline between low double and mid-teens. The latter, of course, includes the estimated impact from tariffs in the U.S. and price undertakings in China. So, in a nutshell, no changes in guidance compared three months ago. Now, let's turn to slide number three, in which we can witness nine-month sales that amounted to 735.4 million euro. representing a year-on-year decrease of €52.3 million or 6.6% on a reported basis. This performance was shaped by the following factors. First, an organic decline of €15.3 million, as said, minus 1.9%. This performance is split between 4.5% of positive volume effect and minus 6.4 of price mix. Price mix effect, the combination, is in negative and has been impacted by both price and mix in the same proportion. Second, a negative currency translation impact of 37 million euro, or 4.7% loss, mainly driven by the deterioration, conversionally speaking, of the U.S. dollar, accounted for around 20 million less than top line, and the Chinese R&D for 11.8. Now, let's turn to slide number four to delve into organic trends by region at group level. Let's start with the Americas, in which organic sales increased by a single digit over nine months. the IE down more or less low-to-mid things on a six-year basis. Year-on-year performance includes a low double-digit growth in volume, a low single-digit negative price mix impact, mainly driven by pricing adjustment. In the U.S., specifically inside America, sales grew by low single-digit in the last quarter, driven by both divisions, on the back of low base of comparison clearly, but another slight sequential improvement in value depletion, which is a positive news. That is not as much as we expected. Improving nonetheless, but less than expected. So what does it mean? Down by mid-single digits year-on-year in nine months, or which down low to mid in Q3. In this context, what happened to Inventor 11 in the U.S. in months of coverage, more or less remains around two, four months at the end of Q3. In Canada, sales were up, mid to high single digit in Q3, underpinned by both divisions. Very balanced picture there as well. And Latam, sales were also up a very strong double digit in Q3, and there mostly led by Cognac. End of December, America has accounted for 39% of group sales, up four points compared to the previous year. Now, turning to APAC. Organic sales declined by no double-digit year-on-year over nine months, but increased compared to 1920 to meet twice single-digit. Looking at the volume value equation, the performance was impacted by low to mid-single-digit volume decline, while the value part was negative at more than mid-single digits. Why that? It was driven by the underperformance of high-end brands and ranges and increased promotional activity. In China, sales were down approximately more or less low double digits in the last quarter, impacted by the market condition, which remains very challenging, and the strong, I repeat, it's very important, negative Chinese real calendar effect. At APAC level, eight points, I repeat, three points on the Q3 at group level. However, the overall performance is almost flat, excluding this technical effect, benefiting from the return to normal trading condition in travel retail and a very solid Double 11 Festival. Specifically, this event was more or less plus 15 compared to the previous year. This was selling. Talking about global value depreciation, they were down high teams year-on-year. Given that depreciation saw roughly in line with selling trends in nine months, inventory levels remained healthy at the end of December. Elsewhere in the IPAC region, rest of Asia, showed a strong improvement compared to the Q2, posting a very strong double-digit sales growth in the last quarter, mostly led by Cognac, Remy Martin, and Louis 13. End of December, APAC region accounted for 37% of group sales, down 5 points compared to the prior year. And then, EMEA region, in which organic sales were down low single digits over 9 months, and around high single digits compared six years ago, primarily reflecting a negative value effect. Inside this region, talking about the subregion, third-party distributors cluster recorded in mid-single-digit states increased in the last quarter, driven by Germany, Greece, and Romania. Most of the growth came from Cointreau and Metaxa. UK and Nordics, sales were down by a single digit in the last quarter, with sell-in below sell-out trends due to the high data comparison in sell-in, and sell-out was positive in a declining market. Benelux and France, sales were up by a low single digit in the last quarter, essentially led by France, and in both divisions, Cognac and Lacrosse Spirits. And last but not least, MI and CAS sales were up by very strong double digits, boosted by the successful launch of EMEA DS in South Africa and Nigeria, which goes well for next year. This was Celine talking about value depletion. They declined by a mid-single-digit year-on-year in nine months. So overall, with this likely disconnection in EMEA in the last quarter, and inventory there slightly increased. End of December, the Indian region accounted for 24% of group sales, up one point compared to the previous year. Now, let's turn to slide number five, and the analysis by division, and let's start with the queen of the division, which is Cognac. Cognac division posted an organic sales decline of 4.3 over nine months, driven nine months by a 5.4% increase in volume in the negative price mix of around 10 points, 9.7. End of December, Cognac accounted for 61% of our sales, down two points compared to the previous year. What happened there? Let's start with the biggest region inside Cognac, which is APAC. And inside APAC, mainland China, in which sales declined by low double digits in the last quarter, affected by the continued complex market condition and, as said, the Chinese New Year calendar effect. Excluding this technical effect, China would have been almost stable, helped by strong performance during the 11-11, 11-11 festival, e-commerce, and return to normal trading condition in trade and retail. In this very tough context, and given whether CBA were ahead of Chinese New Year, all channels were down compared to the previous year. As they were, Taiwan reported a weak performance, salient depletion. Hong Kong and Macau were up strongly, but helped by positive phasing and some promotion. Overall, nine months of value depletion were down by 18th year on year. In the rest of Asia, sales were up by very strong WGNQ3, mostly led by Remy DSOP and WITRT. Americas. In North America, so U.S. and Canada, cognac sales were up by low single-digit in Q3, underpinned by low beta comparison and slight sequential improvement and depletion. Talking specifically of the last quarter, Q3 U.S. value depletion, they were down to a high single-digit area on cognac. Twelve months value-depletion included less three-point and negative price-mix effect on depletion of three points year-on-year at the end of December, but on a six-year basis, price-mix on value-depletion remains up double-digit, plus ten points. In Latin America, sales were up by triple-digit in Q3, driven by BSOP and Reuters team. In EMEA, cognac sales grew by eight-teens in Q3. UK and Norway were down double digit, however, in sell-in, impacted, as said, by high days of comparison, while sell-out was back to positive, supported by a more targeted pricing approach, new listing, and, I remember, in a very negative market. Europe's third-party distributor was flat on Q3, strong improvement versus Q2, as the more flexible pricing approach leading to market share gains. And MI and CIS were clearly up by triple digits, leading the EMEA and CONIAC progression in the quarter, led by South Africa on the back, on the heels of the RME-Martin-VS recent launch. Finally, Benelux and Trans were up by mid-to-high single digits. Lastly, nine-month EMEA redepression were down low double-digit year-on-year. Now, let's turn to slide number six and the same analysis for the other division, Lycos and Spirits. Lycos and Spirits division reported a plus 3.7 organic sales growth in nine months, driven by solid volume increase of plus 5.7 and a negative price mix effect of 2.1. End of December, the division, the Lycos and Spirits accounted for 37% of sales of two points versus the previous year. Now, let's review the division performance by region. Let's start with the Americas, in which North America sales were up by low to mid-single-digit in the quarter, driven by Cointreau, Botanist, which both delivered positive depletion in Q3, as well, in a decline in markets. Specifically, Cointreau and the Botanist Q3 U.S. value depletion were respectively up by low single-digit, and low double year-on-year. Additionally, price mix was down only two points compared to last year for the 12-month rolling basis period ending December that increased by 16 points on a six-year basis. So valorization compared to six years ago in both saline and even more in biodepletion is bigger, is higher, like with the spirits, compared to cognac. Latin America, who says we are down by low single-digit, in sales in Q3 impacted by price increase in Puerto Rico on Cointreau and following tariffs and fake also alcohol issues in Brazil in Sao Paulo. Minha, second region by importance for this division, sales were up by mid-twice single-digit in the last quarter. Breaking sales down further, UK was up there by low single-digit in Q3. led by Cointreau, Port Charlotte, Octomore, and Telmo. The quarter benefited from the positive effect linked to the distribution gains. This is particularly the case for the botanists. From new innovation launches, Cointreau, FTDs, and the greater pricing agility. Overall, the U.K. is gaining market share alongside positive sellout in a declining market. Europe three third-party distributors says we are up there by mid-wide single digits in the quarter, led by Germany and Greece. As said, overall, we recorded a solid growth from Metaxa and Cointreau. And finally, Benelux and France were up by mid-single digits in Q3, while MANCS was down mid-single digits. This was Celine. In parallel, nine months of adaptation were down by low single digits year-on-year. And then, inside this video, we have APAC. in which, in China, sales were down by a single digit in Q3, mostly impacted by Cointreau, which faced an aggressive price environment and competition, and in parallel, nine months' value depletion were down by low double digits. The rest of Asia was down by low double digits in Q3, impacted clearly by Australia due to phasing and very high comps. We are missing a part of the turnover here, which is the non-group rent, which represents 2% of group sales, and they were stable year-on-year. In terms of weight, they recorded an organic decline of 1.9% in nine months, affected clearly by the performance of the most exposed country, which are Benelux and UK. Approaching to the end of the prepared presentation, before switching to the interesting Q&A session, Let's now turn to slide number seven, talking about these yearly 25-26 guidance. We are today confirming our expectation, both for sales and for operating profit. In more detail, we expect organic sales growth to land between flat and low single-digit increase. At the same time, we expect an organic operating profit decline between low double and mid-teens. So nothing changed compared to three months ago. These guidance clearly include the net impact of tariffs, which is estimated this time of the year at around 25 million net, of which 5 million in China and 20 in the U.S. In addition to this organic performance, there are also currency effects, which remains very negative and highly volatile. While our hedging policy helps to mitigate part of the adverse impact, the recent evolution, ongoing evolution of the dollar and B leads us to expect on sales between 50 and 60 million reduction of the turnover and publisher rates of which 60% will occur in the H2 and operating profits It is a bit reversed in terms of phasing between 25 and 30 million negative factor of which one-third should occur in DH2. Exchange rate volatility is likely to persist throughout the year, which is why I will continue to keep you updated on a quarterly basis. But please highlight the fact that so far it has not changed compared to three months ago as well. One final word on our transformation journey. As mentioned in the press release, the program is now effectively underway, starting with a very granular diagnostic phase across the main value creation levels. So what we are talking about, route to market, number one, revenue growth management, number two, A&P and procurement, three and four, as well, more generic, broader review of our cost base and operating model in line what we share with frank marie at the end of the h1 during end of november presentation by the end of april next conference call on q4 we expect to be in a position to communicate the key strategic priorities that will start to be implemented in the fiscal year 26 27. Thank you for your attention, and I'm happy to answer to your question. Give me two seconds to drink a bit of water. Thank you.

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