Rémy Cointreau's Profit Is Hit by China Slowdown

PARIS—After years of steady growth, Rémy Cointreau SA warned that China's crackdown on extravagant gifts is set to hit the company's profit sharply this year and dent sales for some time, the latest sign of how major liquor makers face broad fallout from the shift in policy.

The French company has suffered along with rivals in recent quarters as the Chinese government has scaled back on sponsored banquets and gift giving, which for years had propelled sales of high-end spirits and other luxury goods.

"The situation in China is clearly weighing on our outlook," Chief Executive Frederic Pflanz said Tuesday during a conference call with analysts. "We do not expect any improvement in the Chinese market in the coming months."

Rémy Cointreau said it expected that current operating profit would drop at least 20% for the year ending March 31. The warning battered its shares and those of rivals such as Pernod Ricard SA.