LONDON Remy Cointreau's shares rose 6.8% on Friday after it reported a far smaller-than-expected fall in fourth-quarter sales, saying "significant growth" in China helped drive a surprise uptick at its cognac division.

Remy, which makes over 70% of its sales from cognacs such as Remy Martin, has been grappling with difficult conditions in its two major markets, China and the US, forcing it to cut its full-year forecast in October.

Analysts had been expecting it to post a 3.4% decline in organic sales in the three months to end-March, with flat cognac sales at 0.5%. Instead, organic cognac sales grew 15.4%, bringing the group-level sales decline to just 0.7%.

The company attributed the result to an "excellent" performance in China, where it said it had implemented numerous marketing initiatives aimed at boosting sales during the Lunar New Year festivities in February.

The huge celebration usually boosts liquor sales. It came two weeks later this year - a shift that also helped Remy in the fourth quarter.

Investors in several sectors from drinks to luxury goods are fretting about Chinese demand as the world's second-largest economy sputters.

Remy's rival Pernod Ricard on Thursday pointed to a "soft" Lunar New Year.

Barclays analyst Laurence Whyatt said most consumer companies were downbeat on the Chinese consumer and Remy's sales growth was partially based on increased sales to wholesalers and retailers, so it remained to be seen if the firm could buck the trend.

However, problems in the US continued. US retailers and wholesalers have been cutting expensive booze from their inventories as extraordinary sales in the aftermath of Covid-19 have faded.

Remy said it saw more "major destocking" in the quarter, amplified by phasing effects and more intense promotions from competitors.

Overall, full-year sales in the Americas were down 39.6% as a result, versus 2% growth in Asia Pacific and 0.7% growth in Europe.

Group organic sales for the year stood at €1.19 billion , a 19.2% decline versus a year earlier and slightly ahead of analyst estimates.

Remy reports full-year results on June 6.

  - Reuters