Europe biz: Remy Cointreau buoyed by offloads, Hornby back on track
Catherine Newman

Rémy Cointreau posts higher profit, but forecasts small organic growth

Rémy Cointreau net profits in the first half of the fiscal year increased, buoyed by proceeds from disposals. The French drinks maker posted a profit of $99.4 million for the six months ending 30 September, up from $96.2 million the year before. This was on sales that fell 0.6 percent to $576.5 million. 

The company offloaded subsidiaries in the Czech Republic and Slovakia, which reaped $6.9 million. But when nonrecurring items were excluded from its figures, Rémy's net profit fell 5.6 percent to $93 million.

The family-owned spirits group posted a worse-than-expected 4.7 percent fall in first-half like-for-like current operating profits (earnings before interest and taxes), amid a decline in Hong Kong premium cognac sales and high promotional spending. Group current operating profit for the six months to 30 September reached $152.43 million. This compared with a company-compiled consensus of 15 analysts which forecast current operating profit of $157.8 million dollars. 

For the 2019-20 full year, the company, which houses brands including Rémy Martin cognac, Cointreau liqueur and Mount Gay rum forecasted a stable current operating profit, citing an uncertain geopolitical environment. But the French company kept its medium-term outlook, stating its ambition to generate 60 to 65 percent of its turnover from spirits sold for at least $50 a bottle. 

The company's CEO Valerie Chapoulaud-Floquet, the architect of Rémy-Cointreau's focus towards higher-priced spirits to drive profit margins, will be replaced on December 1st by Richemont's Eric Vallat. 

Rémy Cointreau is a French family-owned business dating back to 1724. (Credit: Craig Barritt / GettyNorthAmerica / Getty Editorial)

Rémy Cointreau is a French family-owned business dating back to 1724. (Credit: Craig Barritt / GettyNorthAmerica / Getty Editorial)


UK car production slumps on falling demand

British automotive output dropped by an annual 4 percent in October, the 16th month out of the past 17 to record a fall, as demand from both domestic and overseas buyers fell, according to a trade body. 

Production stood at 134,752 cars last month, hit by a nearly 11 percent drop in demand from Britons and a 2.6 percent drop in export demand, which accounts for roughly 80 percent of output, statistics from the Society of Motor Manufacturers and Traders (SMMT) showed. 

This year, the global automotive industry has been hit by declining sales in China, trade war worries between the world's two biggest economies, a slump in diesel sales in Europe and the need to invest heavily in electrification.

Model changeovers at some sites were also blamed by the SMMT, which has called for Britain to negotiate the closest possible trading relationship with the European Union after Brexit as part of a trade deal scheduled to take effect from 2021. 

Mike Hawes, SMMT CEO, said: "Our global competitiveness is under threat. To safeguard it, we need to work closely with the next government to ensure frictionless trade, free of tariffs, with regulatory alignment and continued access to talent in the future."


Hornby narrows losses after putting brakes on discounting 

Model railway brand Hornby has narrowed its losses in the first half of the year as the company increased its full-price sales and put the brakes on discounting. 

The company reported a loss after tax of $3.5 million in the six months to 30 September, from a $4.71 million loss the previous year. 

Group revenue rose to $20.5 million from $17.8 in the first half of 2018. 

Hornby's net debt widened from $2.32 million last year to $10.86 million this year, as a result of spending on stock in advance of the Christmas trading period. 

Hornby said that "pulling the handbrake" on discounting had been "much more painful" than expected, but said the company had got through the most challenging part of its turnaround plan, with trust returning and customers re-engaging. 

Hornby also said: "The thinking now is about tuning the engine and ideally adding a couple of superchargers."

The British model railway brand added that it plans to invest in and boost its social media presence and website, saying that current digital platform has "a lot of dusty, old, faded boxes in the window.

"While the internet has caused our physical retailers some problems, we think it will become an important way for us to reach our customers and get them excited about our product pipeline.

"We want to engage more with our existing customers and recruit new ones."

Lyndon Davies, CEO, said: "Revenue is growing, losses are narrowing and we are shifting gears in our journey back to profitability and beyond."

Hornby's group revenue rose to $20.5 million (Credit: Bloomberg / Getty Images / Getty Editorial)

Hornby's group revenue rose to $20.5 million (Credit: Bloomberg / Getty Images / Getty Editorial)


Luthansa strike talks continue 

German airline Lufthansa has offered the UFO trade union the opportunity to begin the comprehensive arbitration process at its subsidiaries Eurowings, Germanwings and CityLine.

Lufthansa said it is offering the flight attendants' union the option after talks over the past three days ended without result and raised the possibility of further strikes. 

In early November, the UFO called for a two-day strike at Lufthansa's German operations, saying there was an ongoing labor dispute with the country's largest airline. 

At the time, Lufthansa strongly condemned the move on Twitter, and said the group was working on a special flight plan to reduce the interference of its scheduled flights. 

As well as disputes over pay and pensions, the UFO has been battling with the airline in court for months over the union's legal status. Lufthansa claims the union's new leadership team that took office earlier this year was not elected in a way that aligned with legal requirements.