China market boosts Remy Cointreau sale rise

April 22 (Bloomberg) -- Remy Cointreau SA rose as much as 6.9 percent in Paris trading after sales doubled in the three months through March as the company sold more cognac in China and recovered from a decline a year earlier.

France’s second-largest liquor company said that revenue excluding the impact of acquisitions and currency movements advanced 100 percent in the fiscal fourth quarter. Analysts at UBS AG predicted that so-called organic sales would increase by 41 percent. Full-year revenue gained 13 percent to 807.8 million euros ($1.08 billion), Paris-based Remy said today in a statement.

Sales of champagne and cognac plunged last year as consumers from Europe to the U.S. bought less pricy products and went to bars and restaurants less frequently during the global recession. LVMH Moet Hennessy Louis Vuitton SA, the market leader in France, said last week that sales at its wine and spirits unit rose 18 percent in the three-month period as U.S. distributors began to increase inventory levels, reversing five consecutive quarters of decline.

The full-year result is “a big beat versus our top-end estimates,” Simon Hales, an analyst at Evolution Securities Ltd., said in a note to clients. “Encouragingly, the higher- margin Asian business was the main driver in the quarter,” said Hales, who has a “buy” rating on the shares.

Sales of cognac increased 28 percent over the full year, boosted by the performance of Remy Martin and “the commercial dynamism in China,” the company said. Revenue from liqueurs and spirits rose 4.9 percent, while champagne fell 24 percent.

Share Performance

The company’s stock rose as much as 2.98 euros to 46.23 euros, the sharpest intraday gain since March 2, and was up 5 percent at 45.41 euros at 9:37 a.m. in Paris. Remy has advanced 28 percent this year, giving the company a market value of 2.2 billion euros.

Remy is benefitting from “stabilization in U.S. spirits” and strong Asia sales, Melissa Earlam, an analyst at UBS AG in London, said in a note before the statement. She has a “neutral” recommendation on the shares.

“With substantially rebalanced geographic markets, Rémy Cointreau can now focus its efforts on developing its key brands in the manner they merit, albeit in an economic climate that one would hope improves,” Chief Executive Officer Jean-Marie Laborde said in the statement.