PARIS, April 30 (Reuters) - French spirits group Remy

Cointreau reported a steeper-than-expected drop in

fourth quarter revenue, as cognac sales in China remained weak

while they returned to growth in the United States.

The maker of Remy Martin cognac and Cointreau liqueur, which

is implementing a cost cutting plan of over 50 million euros

($56.88 million) to protect margins, stuck to its guidance for a

current operating profit margin of between 21% and 22% of sales

on an organic basis for the full year 2024/25.

Remy Cointreau, whose CEO Eric Vallat has said he will leave

the company this summer, is facing weak demand and the threat of

tariffs in its key U.S. and Chinese markets.

Group sales reached 196.8 million euros in the three months

to March 31, marking an organic drop of 19%, compared with

average analysts' expectations of a 17.9% decline in a

company-compiled consensus.

For the 2024/2025 full year sales fell 18%, in line with the

company's guidance for a decline of close to 18% and analysts'

expectations for a 17.9% decline.

Sales at the Remy Martin cognac division , which makes the

bulk of revenue, slumped 32.8% in the quarter, compared with

analysts' expectations for a 29.9% decline.

In China, the sales decline reflected a very high year-ago

comparison basis and tough market conditions as well as

disruptions to Chinese duty-free sales and the negative impact

of the timing of the Chinese New year.

In the United States, where high interest rates and

inflation have hit consumption, sales growth in the fourth

quarter was driven by favorable comparables, a continued

sequential improvement in the sales of wholesalers to retailers.

Remy makes 70% of its sales from cognac, the vast

majority of which is sold in those two nations. This has also

left it more exposed to the tariffs than some competitors with a

broader geographic reach or product portfolio.

Remy reiterated that 2024-25 will be a year of

transition and that 2025-26 will mark a resumption of the

trajectory set for 2029-30, which entails high single-digit

annual growth in sales on average and on an organic basis and a

gradual organic improvement in current operating profit margin.

($1 = 0.8791 euros)