(Bloomberg) -- Remy Cointreau SA’s first-half profit missed analyst expectations amid a sharp decline in US demand for its pricey spirits, but the company kept its sales guidance and vowed not to roll back price increases.
The French cognac maker reported a 43% decline in current operating profit to €169 million ($185 million).
The high-end spirits producer has been sideswiped by a steep drop in demand for its expensive liquors in the key US market and a vicious promotional price war with rivals such as LVMH. In response to the downturn, Remy has vowed to aggressively cut costs by €100 million to protect its profitability.
The company kept its full-year outlook of a 15% to 20% decline in sales on an organic basis. Remy said it has cut costs by about €25 million in the first half.
Chief Executive Officer Eric Vallat said the company will not reverse price increases it made during a boom in cognac demand during the pandemic.
“Holding prices is reinforcing brand equity,” Vallat said on a conference call with investors.
The aggressive cost-cutting measures won’t jeopardize future growth, he said. While a surge in popularity of tequila in the US has cannibalized some cognac sales, he said he expects a rebound for the French spirit.
“Cognac is timeless and always comes back,” Vallat said.
Remy shares were little changed in Paris. They have lost almost a third of their value this year.
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