Remy Cointreau stock fell sharply on Tuesday, nearly 8.5% after China announced anti-dumping duties on European brandy imported from Europe.
This is not the only problem that the French alcohol manufacturer faces.
The stock has struggled over the last year due to broader issues such as weak demand on key markets, fierce competition and other factors.
China has imposed tariffs of between 30.6% and 39% for European Brandies in response to the European Union’s decision imposing duties on Chinese electric vehicles.
The move caused a drop in shares for several European spirits producers including Remy, Pernod Ricard and Diageo.
Remy Cointreau, which is vulnerable to outside pressures, suffered the biggest drop.
The stock of Remy Cointreau has declined for quite some time.
In the last year the price of the shares has fallen by nearly 45%. A 35% drop in the past six-months is also not uncommon.
Pernod Ricard, on the other hand, has suffered less drastic losses. Its shares have fallen 19% in the past 12 months and by 12% over the previous year.
UBS and Citi both revised their views on the company’s outlook for Tuesday.
Citi reduced its price goal from EUR120 down to EUR115 while maintaining its Buy rating. UBS lowered their target from EUR93 up to EUR71 but maintained its neutral position.
Oddo BHF, meanwhile, reiterated that it “outperforms” its rating while reducing the target price of EUR95 down to EUR90.
What’s behind the struggles of Remy Cointreau?
Remy Cointreau’s outlook is bearish due to a number of factors.
The company in the US is still struggling with the inventory adjustment, and there has been no significant improvement to the sell-out trend.
Asia-Pacific, in particular China, is facing headwinds. Meanwhile, Europe, Middle East and Africa (EMEA), which has been experiencing increased competition, has had a weaker performance.
Investors are concerned about sluggish US Cognac sales, the challenging conditions of China’s economy, and uncertainty surrounding government stimuli measures.
The proposed changes to French legislation could also increase corporate tax, adding further challenges for the business.
These struggles are reflected in the company’s performance.
Remy Cointreau has reported that in the Q4 of 2024 its revenue had declined by 22.89% over the last twelve months, and 18.2% on a quarterly basis.
Mid-Autumn Festival, an important sales period in China, failed to live up to expectations as well, adding further difficulties on the Chinese market.
Can Remy Cointreau stock bounce back?
Citi is still optimistic about Remy’s prospects over the long term, despite the negative factors. It calls it the “stock with the greatest absolute upside” within its coverage area for the next 2 to 3 years.
Its 71.19% gross profit margin suggests that it has a strong price-setting power.
Oddo BHF sees the potential of a spirits market recovery, noting Remy Cointreau’s and Diageo’s exposure to China and the US.
It warned, however, that it is uncertain when such a turnaround will occur, and the short-term results are likely to continue being under pressure.
Remy Cointreau faces many challenges at the moment, such as weak sales, competition from outside and macroeconomic uncertainty. Any meaningful recovery will likely be delayed until conditions on the market improve.
As new information becomes available, this post Remy cointreau stocks fall amid China tariffs news but deep issues remain may be updated.
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