Turnover for the financial year ended at the end of March amounted to 19.2 billion euros, a jump of 46% over one year. Net profit improved by 61% to 2.01 billion.
The luxury group Richemont recorded staggered annual results up sharply, but operating profitability disappointed the markets. Without venturing into the field of financial objectives, the owner of Cartier was cautious about the evolution of the Chinese market, one of the most important in the sector, over the coming months.
“The Chinese economy, after the end of the confinements, could suffer longer than the United States or Europe from the impact of the coronavirus pandemic”, estimated Friday by teleconference the president Johann Rupert, on the sidelines of the publication of annual figures.
“Around 40% of our stores are currently closed due to the lockdowns,” said Chief Financial Officer (CFO) Burkhart Grund. The sanitary measures in place in the Middle Empire also affect online commerce, as product deliveries are difficult in confined cities.
The owner of the watch brand Vacheron Constantin pointed out that the group was able to send some of its products stored in China to Japan.
Turnover for the financial year ended at the end of March amounted to 19.2 billion euros (just over 19.7 billion francs), a jump of 46% over one year and 44% excluding foreign exchange effects, a result qualified as “record”, indicates a press release from the owner of Piaget.
Richemont has gained market share in jewelry and watches, notes Vontobel analyst Jean-Philippe Bertschy.
Compared to its 2019/20 financial year, a period very affected by the pandemic, sales increased by 35%, thus clearly exceeding its pre-crisis levels.
Disappointing profitability, share price drop
Net profit improved by 61% to 2.01 billion euros. Operating profit (Ebit) more than doubled (+129.4%) to 3.39 billion and the related margin increased to 17.7%, against 11.2% a year earlier.
The Board of Directors proposes the payment of an ordinary dividend raised by 12.5% to 2.25 francs per share for the past financial year, supplemented by a special dividend of 1.00 francs.
If revenues have exceeded analysts’ expectations, profitability has missed the boat. The specialists interviewed by AWP expected on average an Ebit of 3.8 billion and a net profit of 2.7 billion.
Higher-than-expected spending, particularly for marketing and communication, explains this gap, Vontobel analysts point out. A charge of 168 million euros related to the war in Ukraine also weighed on earnings.
The jewelry division, the largest which includes the Cartier and Van Cleef & Arpels brands, saw its revenues increase by 49% to more than 11 billion, and its margins reached 34.3%.
In watchmaking, which also includes IWC and Panerai, turnover took off by 53% to 3.4 billion, and the operating margin was 17.3%.
The “online distribution” division, which includes Yoox-Net-a-porter (YNAP), saw its sales increase by 27% but continues to suffer a loss. Richemont further indicated that discussions with Farfetch about a possible collaboration with YNAP were taking time, but were still ongoing.
The figures of the day were not to the taste of investors. The Richemont title ended the session down 13.1% to 91.76 francs, after spending the whole day in the red. The flagship SMI index, for its part, just ended up in balance.
The former boss of Hermès proposed to the board of directors
The luxury group Richemont intends to make several changes to its board of directors at the next general meeting to be held in September. The shareholders will be submitted in particular the candidacy of the former managing director (CEO) of the competitor Hermès, Patrick Thomas.
Jasmine Whitbread is also expected to join the watchdog, according to a statement released Friday. Alan Quasha and Gary Saage, as well as Jan Rupert and Ruggero Magnoni will not be candidates for re-election.
Subject to the approval of the general meeting, the board of directors should thus be reduced to 16 members.