Published: March 01, 2011
“The year ended 31 March 2010 was marked by a decisive event for the Group’s long-term future: on 1 April 2009, Rémy Cointreau rolled out its new worldwide commercial structure, thus taking control of 80% of its turnover and establishing a presence in new countries such as India and Brazil. Group brands now benefit from distribution that is consistent with their premium positioning and the direct application of their strategy by talented teams.
In an ongoing difficult economic environment, the Group achieved a 12% increase in turnover and a 7.2% increase in operating profit of €140m. Rémy Cointreau thus demonstrated great resilience in the current crisis due to the success, from the first year, of its new distribution model, the dynamism of its brands and the high quality of its products.”
Dominique Hériard Dubreuil, Chairman of the Board.
Jean-Marie Laborde, Chief Executive Officer.
Rémy Cointreau
In the period ended 30 September 2010 (mid year results), the Group generated a current operating profit of € 81m, a significant increase of 23.7% (up 8.4% organic).Current operating profit represented 18.9% of turnover, an increase of nearly one percentage point.
The Group successfully restructured its debt during the first half of the year, through the conclusion of a 3.67%, €140m private placement maturing in June 2015, the issue of €205m in bonds maturing in December 2016 bearing a 5.18% interest and early redemption of the € 200m bond issue.
Consequent to the restructuring, the Group’s key brands, such as Rémy Martin, Cointreau and Piper-Heidsieck now rely on a largely restructured and controlled distribution network. The network offers a sound basis for growth in high potential worldwide markets, particularly China and South East Asia. It also enables the Group’s differentiation based on refinement and discernment, and standardises price increase policies for its key brands.
The restructuring of Rémy Cointreau’s distribution arrangements, from a joint venture to fully owned and controlled distribution, had a variety of implications for Group Treasury. The entity structure immediately became more complex and the sophistication of its cash and treasury management also increased substantially. For example, while customer credit risk was previously the responsibility of the joint venture distribution company, this has now become Group Treasury’s responsibility. Another implication has been the need to introduce new treasury technology to manage the Group’s more sophisticated requirements, which this article discusses in more detail.[[[PAGE]]]
Although Rémy Cointreau’s distribution arrangements changed in 2009, the reorganisation had been planned over a long time. Consequently, in 2007, Group Treasury embarked on a market study of the principal treasury management software providers, with a view to replacing the legacy system that had previously been in place. While this tool had supported the Group’s needs over a long period, it was outdated in its design, and did not support the evolving group structure. As a result of this investigation, Rémy Cointreau selected IT2 for a variety of reasons. Firstly, its front- and back-office capabilities were fully integrated, with a high degree of transparency and auditability of transactions using an on-screen transaction tracking tool. As the system has internet capabilities, treasury could roll out functionality to affiliates for in-house banking, FX and cash flow forecasting. In addition, the system was easy to use. Another criterion was its ability to be integrated with SWIFTNet.
The implementation was started early in 2009 and completed by the end of the year, with some subsequent small modifications.In late 2010, the implementation of SWIFTNet started, but this has not yet been completed due to some changes to the department. However, the testing phase is now coming to an end, and the connection to SWIFTNet should be live by the end of the 1st quarter, 2011.
Inevitably, there have been challenges that have resulted from a major business reorganisation, and a new treasury system has assisted in managing some of these.It was important to make sure that risks across the Group were captured. In this respect, the new system has been helpful in achieving this, as it is flexible enough to be adapted to the company’s needs,although inevitably there is a cost to this.
Before implementing a new system,while there had been a primary treasury management system in place, there were also a variety of ancillary spreadsheets,for activities such as revaluation and importing market data, all of which were managed separately. By bringing all of the functions performed by these various applications into a single system,it is easier to manage data in a consistent way, to maintain expertise across the team, and to control Group Treasury activities. As a result, Group Treasury has experienced productivity gains and a reduction in risk.
The next steps in Rémy Cointreau’s treasury infrastructure is to complete the SWIFTNet connection and to look at ways of enhancing payment processes. Implementing a new system has been critical to Group Treasury’s ability to step up to the challenge of delivering on a new business strategy and will be crucial to its future success.
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