Richemont plans higher dividend after profit rise

Geneva-based luxury goods giant Richemont boosted net profit for the 2012-2013 year by 30 percent as expected, with strong performances in its jewellery and watch divisions and by favourable exchange rates, the group said on Thursday.

Richemont plans higher dividend after profit rise
Richemont headquarters in Geneva. Photo: Richemont

The firm, the world's second-biggest luxury goods group, which owns the Cartier, Piaget, Jaeger-LeCoultre and Montblanc brands among others, said its net profit for the financial year ending at the end of March reached two billion euros ($2.6 billion).
The group, which had already forecast the surge last month, citing 
favourable exchange rates, also announced that its chairman Johann Rupert soon planned to take a leave of absence.
Richemont meanwhile said its operating profit had jumped by 18 percent to 
2.4 billion euros during the financial year, on sales up 14 percent at 10.1 billion euros.
The results were especially sweetened by a 13-percent rise in jewellery 
sales to 5.2 billion euros, and an 18-percent rise in watch sales to 2.7 billion euros.
"The Jewellery Maisons and the Specialist Watchmakers have reported 
remarkable growth in sales and profits, despite the continuing strength of the Swiss franc and historically high cost of precious metals and stones," chairman Rupert said in the earnings report.
On a region-by-region basis, the company said sales in the 
Americas soared 18 percent to 1.2 billion euros, increased 17 percent in Europe to 3.1 billion euros, and rose 13 percent in the Asia Pacific region to 4.1 billion euros.
Although impressive, these increases fell far short of the 43-percent jump 
Richemont achieved in overall sales last year, as the Swiss watch industry experienced its biggest boom ever thanks to a huge Chinese appetite for European luxury goods.
Rupert said 
on Thursday he was optimistic "despite the slowdown in the Asia Pacific region and continuing uncertainty in the world economy."
"The enduring appeal of our Maisons and their growth potential lead us to 
look forward to the future with a degree of optimism," he said.
In light of the strong results, the board nearly doubled dividends for the 
financial year, proposing one franc per share up from 0.55 francs last year.
Following the news, the price of shares in the company jumped 5.94 percent 
to 87.45 francs a share in late morning trading as the Swiss stock exchange's main index shed 0.54 percent.
Rupert also said 
on Thursday that he planned to take a year off after the next general assembly meeting in September, although he stressed that he planned to take back the reins the following year.
"After 25 years, I think I have the right to take a break," he told a 
conference call with reporters, adding that he planned to use his year off to visit the Antarctic and that he wanted to read about 50 books.

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Swiss luxury giant Richemont sees profits halved on watch woes

Swiss luxury goods giant Richemont said Friday its full-year net profit was nearly cut in two as sales of high-end watches ticked lower.

Swiss luxury giant Richemont sees profits halved on watch woes
File photo: Richard Juilliart/AFP

Richemont, second only to France's LVMH in the luxury world, posted a net profit of 1.2 billion euros during its 2016/2017 fiscal year — down 46 percent from a year earlier.

Its sales meanwhile slumped to 10.6 billion euros, down from 11 billion during the previous 12-month period.

A drop in profits had been expected, since the results the company announced a year ago were padded with 639 million euros from the merger of its online sales platform Net-a-Porter and an Italian counterpart, Yoox.

But the fall was steeper than expected, with analysts polled by Swiss financial news agency AWP expecting the company to post a net profit of 1.3 billion euros on sales of 10.7 billion.

“The past year posed challenges for Richemont,” company chairman Johann Rupert acknowledged in a statement, pointing especially to “changes in demand, which particularly affected our watch businesses”.

The luxury watch sector has seen tough times since Chinese authorities banned giving expensive gifts as part of an anti-corruption crackdown in 2013, followed by democracy protests in 2014 hitting sales in Hong Kong.

READ ALSO: Why a Swiss company created a watch made from cheese

Faced with dwindling demand, Richemont has cut staff and also repurchased inventory from shops to help them remove models struggling to find buyers from display cases and make room for new collections.

The company, which owns top global brands such as Jaeger LeCoultre, Van Cleef & Arpels and IWC, saw its watch sales slump 11 percent during the past fiscal year, which ended on March 31st.

Its operating margin meanwhile was more than halved to 7.8 percent due to its repurchasing of inventory and efforts to scale back its production capacity.

Following the announcement, Richemont saw its share price drop 4.15 percent to 81.75 Swiss francs (75 euros) a piece in early afternoon trading, as the Swiss stock exchange's main SMI index inched up 0.23 percent.