Moody's cuts Rémy Cointreau outlook to negative

Moody's Investors Service said it changed the outlook on Rémy Cointreau SA's Ba2 corporate family rating and senior unsecured rating to negative from stable, following the company's revised profit guidance.

The agency noted that Rémy announced that its current operating profit would decline by 15% in the current fiscal year ending March 31 from previously anticipated flat growth.

The change in outlook to negative reflects Moody's expectations that reduced volumes for spirits in the United States and parts of Western Europe, not quite compensated for by sustained consumption in China, as reported by the company for the first nine months of FYE 31 March 2009, will weigh on the company's credit metrics.

"Moody's believes that the decline in profitability will add pressure to Rémy's credit metrics at a time when the company incurs additional costs and execution risks from a change to a new distribution network," said Moody's analyst Yasmina Serghini.

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