Remy Cointreau full-year profits rise 10.6% on strong demand for premium cognac

French spirits maker, Remy Cointreau, said on Thursday that net profits for the full-year ending March 2016 rose 10.6% to €102.4m ($125.9m), from €92.6m the previous year. The rise was led by strong demand for premium cognac and other dark spirits in the U.S. and Asia Pacific region. Remy Cointreau has been accelerating its drive to sell high-end spirits priced above $50 per bottle.

The star performer was the group’s Rémy Martin cognac, which accounts for about half of the company’s revenue, rebounded across regions after two years of decline, climbing 14.7% on a reported basis and 3.2% on a constant currency basis in the year to the end of March.

Other measures that helped profits rise includes strong sales of higher-priced spirits like the 1738 Accord Royal and Club cognac brands in the United States, now the group’s largest market, accounting for slightly over 30 percent of sales against nearly 20 percent for China, and improving demand for cognac in China in the second half.

The Remy Martin division, the group’s largest, saw its operating profit rise 6.4 percent. This offset a 2.8 percent decline in the Liqueurs and Spirits division, due to difficult economic conditions in Russia and Greece.

The company said revenue rose 8.9% to €1.05bn, partly helped by favourable exchange rates. On a comparable basis, revenue climbed 0.3%

However, analysts warn that exchange rates could weigh heavily on Rémy Cointreau’s fortunes in the coming year. They point that the 8.9% increase in reported sales for the year to the end of March fell to a slim 0.3% increase once positive currency movements were stripped out. The net profit increase of 10.6% dropped to a negative 1.4%.

Cointreau noted that prices for liqueur and its efforts to reduce overhead expenses helped offset extra spending on communications, particularly in the U.S. and the higher cost of eaux-de-vie, the spirits used for making cognac.

The company said it expects growth in current operating profits in the current fiscal year, stripping out the impact of foreign exchange fluctuations and mergers and acquisitions.

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