A combination of existing stocks in China and lower demand meant the impact of tariffs in Remy's current financial year, ending March 31, would be marginal, Chief Financial Officer Luca Marotta said. Later on, the company would take actions to mitigate the impact, Marotta said.
It had already conducted research to establish the sales impact "linked to the price increase that, for sure, we will be obliged to pass through," he told investors when reporting third quarter sales and updating Remy's outlook.
Rivals, including Pernod Ricard (PERP.PA) and luxury goods giant LVMH (LVMH.PA), which owns Hennessey cognac, have so far not been drawn on price increases, saying they will watch what competitors do.
Marotta also declined to elaborate on the timing or extent of price increases, as well as the scale of the potential impact on volumes in China.
Price increases will not be the only lever Remy can pull, he continued, saying it can also cut costs in areas, such as manufacturing and advertising spending.
Initially, the tariffs will hit cash, he said, with the impact on earnings only recognised later when cognac is sold in China by the company's local unit.
Marotta said that the provisional tariffs still need to be confirmed, but the impact was included in sales guidance for its current financial year, which it slashed on Friday.
