Richemont bounces back with +42% surge in first half profits as consumer spending, travel revive – 18/11/04

INTERNATIONAL. Richemont, the world’s second-largest luxury goods group today, reported a +42% lift in its first half net profit to €411 million (US$536 million) on the back of a revival in consumer spending and an improved travel market.

Sales for the six months to 30 September rose +14% compared to the same period last year to €1.7 billion, the Switzerland-based international group said. Operating profit increased +157% to €208 million over the six-month period.

The group, whose brands include Montblanc, Cartier, Van Cleef & Arpels, Piaget, A. Lange & Söhne, Baume & Mercier, IWC, Dunhill, Jaeger-Le Coultre, Shanghai Tang and Lancel, said the recovery was most marked in Asia Pacific.

Executive Chairman Johann Rupert commented: “The improvement in Richemont’s results for the first half of the year is indicative of the strength of the Group’s underlying businesses. There has been a significant recovery in demand in those markets which showed the biggest downturn last year, specifically the Asia Pacific region, and we have seen good growth in the Americas and in Europe.

“Cartier, the Group’s leading Maison, once again has good momentum in terms of new products. New product launches during the period and a broader product offering have resulted in both higher sales and
profitability. Richemont’s specialist watch brands have also performed well. In particular, the three businesses acquired in 2000 – IWC, Jaeger-LeCoultre and A. Lange & Söhne – are now making significant progress in important markets where they were previously under-represented.

“Montblanc’s strategy of product diversification, linked to the expansion of its retail activity, continued to deliver good growth in sales and profitability during the period. At Alfred Dunhill, the focus on leather, accessory and gift lines is bearing fruit, as is the expansion of the wholesale business. Operating losses have therefore been reduced. During the period, sales in the Asia Pacific region, which is important to the Maison, recovered and Alfred Dunhill is building its distribution network in China.

“Lancel is still in a process of transition. Whilst the international retail network has been scaled back, wholesale distribution outside France has been expanded and Lancel will work with retail partners in China,
the US and Japan to grow its businesses in these markets.

“We have seen a good performance from the Group’s investment in British American Tobacco and Richemont is now debt-free, having received the proceeds of the disposal of its interest in the BAT preference shares.”

Commenting on the outlook, Rupert said: “The trend of growing sales has continued into the month of October, with overall growth of +8% for the month. Europe and the Asia Pacific region reported good results, although growth in the United States slowed somewhat. Richemont’s Maisons are, in general, very strongly positioned in their respective markets. They are better prepared than ever before to meet competitive challenges, can respond more flexibly and have outstanding products.

“Assuming a continuation of the trends that we have seen in recent months, we believe that the Group should enjoy a strong pre-Christmas season, albeit recognising that comparative figures for the quarter to 31 December 2003 already showed an improving trend in sales. We anticipate a significant improvement in operating profit for the current year. Nonetheless, we live in very difficult and volatile times and these expectations are, of course, predicated upon there being no events which might adversely impact consumer confidence in the months ahead.”

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