COMPANY ANNOUNCEMENT 9 November 2012 Richemont, the Swiss luxury goods group, announces its unaudited consolidated results for the six month period ended 30 September 2012 Financial highlights *Sales grew by 21 % to EUR 5 106 million, or by 12 % at constant exchange rates *Solid growth across segments, regions and channels *Operating profit increased by 28 % to EUR 1 380 million, benefitting from favourable currency movements *Operating margin gained 150 basis points to reach 27 % *Profit for the period rose by 52 % to EUR 1 081 million *Cashflow from operations of EUR 575 million Key financial data (unaudited) 6 months ended 30 September 2012 2011 Change Sales EUR 5 106 m EUR 4 214 m + 21 % Gross profit EUR 3 310 m EUR 2 665 m + 24 % Gross margin 64.8 % 63.2 % + 160 bps Operating profit EUR 1 380 m EUR 1 075 m + 28 % Operating margin 27.0 % 25.5 % + 150 bps Profit for the period EUR 1 081 m EUR 709 m + 52 % Earnings per share, diluted basis EUR 1.947 EUR 1.266 + 54 % Cashflow generated from operations EUR 575 m EUR 606 m - EUR 31 m Net cash position EUR 3 048 m EUR 2 596 m + EUR 452 m This document contains forward-looking statements as that term is defined in the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risk and uncertainties, many of which are outside the Group's control. Richemont does not undertake to update, nor does it have any obligation to provide updates of, or to revise, any forward-looking statements. Executive Chairman and Chief Executive Officer's commentary Richemont is reporting a solid set of results for the first half of this year. The Group's Maisons benefitted from favourable exchange rates effects, successful product launches as well as strong pricing power. The increase in net profit was well above the prior period, reflecting both the growth in operating results and the non-recurrence of non-cash losses, which stemmed from the Swiss franc's appreciation against the euro based on the closing Swiss franc rate. Richemont's financial position continues to be strong: the Group's net cash position is EUR 3 billion. Sales growth rates moderated, as evidenced by the October sales which grew by 12 % at actual exchange rates. At constant exchange rates, they were 7 % higher. Richemont is seeing good growth in Europe, supported by Asian tourism which is compensating for slower domestic Asia Pacific sales. Retail continued to lead wholesale, reflecting robust jewellery sales. For the second half of the year, the comparatives are likely to be impacted by less favourable exchange rates. With a view to strengthening the manufacturing base and exploiting growth opportunities as they arise, the Group's Maisons will execute their investment programmes as planned. Johann Rupert, Executive Chairman and Chief Executive Officer Compagnie Financière Richemont SA Geneva, 9 November 2012 *** Financial Review Sales Sales in the six-month period increased by 21 % at actual exchange rates, or by 12 % at constant exchange rates. The increase in sales reflected, in particular, sales growth in the Group's own retail network, bolstered by very strong demand in Europe during the period. Further details of sales by region, distribution channel and business area are given in the Review of Operations on pages 5 to 8. Gross profit Gross profit rose by 24 % and the gross margin percentage was 160 basis points higher at 64.8 % of sales. Several factors caused the increase in the gross margin percentage, in particular favourable currency movements. Other favourable factors included the impact of price increases and the growing proportion of sales made through the Maisons' own boutiques. These favourable factors were partly offset by the impact of the cessation of hedge accounting, which was initiated in the prior year. In the current period, foreign exchange losses recognised in the gross margin were immaterial whereas gains in the prior period added 166 basis points to the gross margin percentage. Operating profit Operating profit increased by 28 %, reflecting the significant increase in gross profit, offset by an increase in operating expenses of 21 %, or 14 % at constant exchange rates. Selling and distribution expenses were 23 % higher, reflecting in particular the increase in sales in the Maisons' own boutique networks. Communication expenses also increased by 23 % and represented 8 % of sales. Administration costs rose by 19 % and reflected the expansion of certain of the Group's shared service platforms. As a consequence, operating margin increased by 150 basis points to 27.0 % in the period under review. Profit for the period Profit for the period increased by 52 % to EUR 1 081 million, reflecting the following significant items: *Within net finance costs, EUR 142 million of mark-to-market losses have been recorded in respect of currency hedging activities (2011: losses of EUR 113 million). *In the comparative period, the Swiss franc's appreciation against the euro generated reported non-cash losses of EUR 153 million in respect of the Group's cash position. In the period under review, there were no such non-cash losses as a consequence of the stable euro: Swiss franc exchange rate. The effective taxation rate was 15.6 %, reflecting the anticipated full-year rate, which is in line with prior periods. Earnings per share increased by 54 % to EUR 1.947 on a diluted basis. To comply with the South African practice of providing headline earnings per share ('HEPS') data, the relevant figure for headline earnings for the period ended 30 September 2012 would be EUR 1 087 million (2011: EUR 713 million). Basic HEPS for the period was EUR 1.983 (2011: EUR 1.303). Diluted HEPS for the period was EUR 1.949 (2011: EUR 1.273). Further details regarding earnings per share and HEPS, including an itemised reconciliation, may be found in note 8 of the Group's condensed consolidated interim financial statements. Cashflow Cashflow generated from operations was EUR 575 million, broadly in line with the prior period. The additional cash generated from operating profit was absorbed by working capital movements and settlement of maturing foreign exchange contracts. The net acquisition of tangible fixed assets amounted to EUR 217 million, reflecting selected investments in the Group's network of boutiques, particularly in the Asia Pacific region, and further investments in manufacturing facilities in Switzerland. The 2012 dividend, at CHF 0.55 per share, was paid to shareholders net of withholding tax in September. The cash outflow in the period amounted to EUR 164 million; the withholding tax was remitted to the Swiss authorities in October. During the period, the Group acquired some 6 million 'A' shares to hedge executive stock options. The cost of these purchases was partly offset by proceeds from the exercise of stock options by executives and other activities linked to the hedging programme, leading to a net outflow of EUR 86 million. Financial structure and balance sheet Inventories at the end of September amounted to EUR 4 033 million. This figure represents 16 months of gross inventories and is in line with the rotation at September 2011. The stable rate of stock turn reflects the favourable trading conditions in particular. In absolute terms, the increase in the value of inventories resulted from the strategic build-up of inventories and the expansion of the Maisons' boutique networks. At 30 September 2012, the Group's net cash position amounted to EUR 3 048 million, broadly in line with the position at 31 March 2012. The Group's net cash position includes short-term liquid funds as well as cash, cash equivalents and all borrowings. Liquid money market funds, government bond funds and cash balances were primarily denominated in euros, whereas borrowings to finance local operating assets are denominated in the currencies of the countries concerned. Total borrowings, including bank borrowings and short-term loans, amounted to EUR 213 million. Richemont's financial structure remains very strong, with shareholders' equity representing 71 % of total equity and liabilities. *** Review of operations 1. Sales by region Movement at: Constant Actual In EUR 30 September 30 September exchange exchange millions 2012 2011 rates rates Europe 1 857 1 514 + 19 % + 23 % Asia Pacific 2 103 1 718 + 9 % + 22 % Americas 698 602 + 4 % + 16 % Japan 448 380 + 4 % + 18 % 5 106 4 214 + 12 % + 21 % *Note: movements at constant exchange rates are calculated translating underlying sales in local currencies into euros in both the current year and the comparative year at the average exchange rates applicable for the financial year ended 31 March 2012. Europe Europe accounted for 36 % of overall sales. The region enjoyed good growth, with visitors/travellers driving the above-average increase. The highest growth rates were in the Maisons' own boutiques in tourist destinations, including the Middle East. Asia Pacific Sales in the Asia Pacific region accounted for 41 % of the Group total, with Hong Kong and mainland China the two largest markets. Following two years of exceptionally high rates of sales growth, the rate during the period under review moderated. Sales growth in our Maisons' own boutiques in the region was well above the increase in sales to wholesale partners, partly reflecting the number of boutique openings in the last two years. Americas After two years of outstanding sales, the Americas region reported single-digit growth before currency translation effects and represented 14 % of Group sales. Certain exceptional High Jewellery sales took place in the comparative period, primarily in the Jewellery Maisons. Japan The increase in sales in Japan reflected the continued momentum in all segments. 2. Sales by distribution channel Movement at: Constant Actual In EUR millions 30 September 30 September exchange exchange 2012 2011 rates rates Retail 2 618 2 083 + 15 % + 26 % Wholesale 2 488 2 131 + 8 % + 17 % 5 106 4 214 + 12 % + 21 % *Note: movements at constant exchange rates are calculated translating underlying sales in local currencies into euros in both the current year and the comparative year at the average exchange rates applicable for the financial year ended 31 March 2012. Retail Overall retail sales, comprising directly operated boutiques and Net-a-Porter, increased by 26 %. This continues to be well above the growth in wholesale sales and 51 % of Group sales are now generated through its own retail network. The growth in retail sales partly reflected the good performance of Net-a-Porter and the expansion of the Maisons' network of boutiques to 988 stores. Openings during the period were primarily in high-growth markets. Wholesale The Group's wholesale business, including sales to franchise partners, reported solid growth. This performance reflects the marketing environment in this channel. 3. Sales and operating results by business area Jewellery Maisons In EUR millions 30 September 2012 30 September 2011 Change Sales 2 607 2 165 + 20 % Operating results 958 734 + 31 % Operating margin 36.7 % 33.9 % + 280 bps The Jewellery Maisons' sales grew by 20 %. Both Cartier and Van Cleef & Arpels generated remarkable results. The Maisons' boutique networks reported good growth and benefitted from boutique openings. Demand for High Jewellery pieces and more accessible jewellery ranges was strong. Demand for Cartier's watch collections was solid. The significant increase in sales and positive gross margin development generated an operating margin of 37 %. Specialist Watchmakers In EUR millions 30 September 2012 30 September 2011 Change Sales 1 459 1 171 + 25 % Operating results 470 312 + 51 % Operating margin 32.2 % 26.6 % + 560 bps The Specialist Watchmakers' sales increased by 25 %, reflecting the worldwide demand for haute horlogerie. Most Specialist Watchmakers contributed to the significant increase in the contribution margin to 32 %, reflecting the Maisons' pricing power and operating leverage in an environment where currency fluctuations were supportive. Montblanc Maison In EUR millions 30 September 2012 30 September 2011 Change Sales 368 334 + 10 % Operating result 53 54 - 2 % Operating margin 14.4 % 16.2 % - 180 bps Montblanc's sales increased by 10 %: they were primarily driven by watches and currency effects. Compared with other Group businesses, Montblanc benefits less from sales in tourist destinations. The Maison's operating margin decreased to 14 %. Other In EUR millions 30 September 2012 30 September 2011 Change Sales 672 544 + 24 % Operating results (15) (17) + 12 % Operating margin (2.2) % (3.1) % + 90 bps 'Other' includes the Group's Fashion and Accessories businesses, Net-a-Porter and the Group's watch component manufacturing activities. Richemont's Fashion & Accessories Maisons saw double-digit sales growth and operating profits were in line with the prior period at EUR 25 million. Sales growth at Net-a-Porter is normalising but continues to exceed the Group's average. Net-a-Porter reduced its losses during the period, but generated a positive operating cashflow. Losses at the Group's watch component manufacturing facilities were in line with the comparative period. Corporate costs In EUR millions 30 September 2012 30 September 2011 Change Corporate costs (86) (8) n/a Central support services (78) (69) + 13% Other operating (expense)/income, (8) 61 n/a net Corporate costs represent the costs of central management, marketing support and other central functions (collectively central support services), as well as other expenses and income which are not allocated to specific business areas. The increase in central support service reflects the support of IT systems and other long-term initiatives. On a constant exchange rate basis, the cost of central support services increased by 10 %. In the comparative period, other operating income included gains of EUR 70 million relating to the Group's exchange rate hedging programme, which are reported within gross profit. Following the cessation of hedge accounting, there were no material exchange rate gains or losses reported in gross profit in the period under review. *** The Group's condensed consolidated financial statements of comprehensive income, of cashflows and of financial position are presented in Appendix 1. Richemont's unaudited condensed consolidated interim financial statements for the period may be found on the Group's website at http://www.richemont.com/investor-relations/reports.html Richard Lepeu, Deputy Chief Executive Gary Saage, Chief Financial Officer Officer Presentation The results will be presented via a live internet webcast on 9 November 2012, starting at 09:00 (CET). The direct link will be available from 07:00 (CET) at: http://www.richemont.com *Live listen-only telephone connection: call one of these numbers 10 minutes before the start of the presentation: Europe: +41 91 610 56 00 USA: +1 866 291 4166 UK: +44 203 059 5862 South Africa: 0800 992 635 (toll free) *An archived video webcast of the presentation will be available from: http://www.richemont.com/investor-relations/results-presentations.html *A transcript of the presentation will be available from: http://www.richemont.com/investor-relations/results-presentations.html Interim report The Richemont 2012 Interim Report will be published on 15 November 2012 and will be available for download from the Group's website at http://www.richemont.com/investor-relations/reports.html; copies may be obtained from the Company's registered office or by contacting the Company via the website at http://www.richemont.com/about-richemont/contact.html Compagnie Financière Media contact Investor contact Richemont SA Registered office: Alan Grieve Sophie Cagnard 50 chemin de la Director of Corporate Head of Investor Relations Chênaie Affairs CP30, 1293 Bellevue Geneva Switzerland Tel: +41 22 721 3507 Tel +33 1 58 18 25 97 E-mail: E-mail: firstname.lastname@example.org email@example.com Tel : +41 22 721 3500 Fax : +41 22 721 3550 Internet: www.richemont.com Statutory Information Primary listing SIX Swiss Exchange (Reuters "CFR.VX" / Bloomberg "CFR:VX" / ISIN CH0045039655). The Swiss 'Valorennummer' is 4503965. Richemont 'A' bearer shares are included in the Swiss Market Index ('SMI') of leading stocks. Secondary listing Johannesburg stock exchange operated by JSE Limited (Reuters "CFRJ.J" / Bloomberg "CFR:SJ" / ISIN CH0045159024). South African depository receipts in respect of Richemont 'A' shares. The closing price of the Richemont 'A' share on 30 September 2012 was CHF 56.40 and the market capitalization of the Group's 'A' shares on that date was CHF 29 441 million. Over the preceding six month period, the highest closing price of the 'A' share was CHF 64.15 (10 September) and the lowest closing price of the 'A' share was CHF 48.40 (12 July). © Richemont 2012 Appendix 1 Condensed consolidated statement of comprehensive income Six months to Six months to 30 September 2012 30 September 2011 EUR m EUR m Sales 5 106 4 214 Cost of sales (1 796) (1 549) Gross profit 3 310 2 665 Selling and distribution expenses (1 096) ( 891) Communication expenses ( 418) ( 340) Administrative expenses ( 408) ( 342) Other operating (expense)/income ( 8) ( 17) Operating profit 1 380 1 075 Finance costs ( 156) ( 287) Finance income 57 61 Share of post-tax results of associated ( 1) ( 1) undertakings Profit before taxation 1 280 848 Taxation ( 199) ( 139) Profit for the period 1 081 709 Other comprehensive (loss)/income: Currency translation adjustments - movement in the period ( 30) 427 - reclassification to profit or loss - 1 Cash flow hedges - net gains - 20 - reclassification to profit or loss 1 ( 70) Other comprehensive (loss)/income, net of ( 29) 378 tax Total comprehensive income 1 052 1 087 Profit attributable to: Owners of the parent company 1 086 709 Non-controlling interests ( 5) - 1 081 709 Total comprehensive income attributable to: Owners of the parent company 1 057 1 086 Non-controlling interests ( 5) 1 1 052 1 087 Earnings per share attributable to owners of the parent company during the period (expressed in EUR per share) Basic 1.981 1.295 Diluted 1.947 1.266 Condensed consolidated statement of cash flows Six months to Six months to 30 September 2012 30 September 2011 EUR m EUR m Operating profit 1 380 1 075 Depreciation and impairment of property, 141 119 plant and equipment Amortisation and impairment of other 43 43 intangible assets Loss on disposal of property, plant and 1 - equipment Increase in provisions 25 26 Decrease in retirement benefit ( 1) ( 3) obligations Non-cash items 13 ( 55) Increase in inventories ( 367) ( 340) Increase in trade debtors ( 289) ( 288) Increase in other receivables and ( 32) ( 27) prepayments (Decrease)/increase in current and ( 339) 56 long-term operating liabilities Cash flow generated from operations 575 606 Interest received 6 17 Interest paid ( 11) ( 13) Other investment income 2 3 Taxation paid ( 150) ( 129) Net cash generated from operating 422 484 activities Cash flows from investing activities Acquisition of subsidiary undertakings and other businesses, net of cash acquired ( 30) ( 3) Acquisition of associated undertakings - ( 1) Acquisition of property, plant and ( 218) ( 140) equipment Proceeds from disposal of property, plant 1 17 and equipment Acquisition of intangible assets ( 38) ( 29) Acquisition of investment property ( 13) - Investment in money market and government ( 2) ( 151) bond funds Proceeds from disposal of money market 230 143 and government bond funds Acquisition of other non-current assets ( 17) ( 16) Proceeds from disposal of other 7 9 non-current assets Net cash used in investing activities ( 80) ( 171) Cash flows from financing activities Proceeds from borrowings 127 10 Repayment of borrowings ( 4) ( 101) Acquisition of non-controlling interests ( 3) - Dividends paid ( 164) ( 133) Payment for treasury shares ( 206) ( 279) Proceeds from sale of treasury shares 120 74 Capital element of finance lease payments ( 1) ( 1) Net cash used in financing activities ( 131) ( 430) Net change in cash and cash equivalents 211 ( 117) Cash and cash equivalents at beginning of 872 657 period Exchange gains on cash and cash 5 32 equivalents Cash and cash equivalents at end of 1 088 572 period Condensed consolidated statement of financial position 30 September 2012 31 March 2012 Assets EUR m EUR m Non-current assets Property, plant and equipment 1 590 1 529 Goodwill 491 479 Other intangible assets 314 316 Investment property 66 64 Investments in associated undertakings 9 10 Deferred income tax assets 483 443 Financial assets held at fair value through 64 69 profit or loss Other non-current assets 298 248 3 315 3 158 Current assets Inventories 4 033 3 666 Trade and other receivables 1 133 750 Derivative financial instruments 22 27 Prepayments 109 116 Financial assets held at fair value through 2 173 2 400 profit or loss Cash at bank and on hand 2 433 1 636 9 903 8 595 Total assets 13 218 11 753 Equity and liabilities Equity attributable to owners of the parent company Share capital 334 334 Treasury shares ( 596) ( 515) Hedge and share option reserves 255 255 Cumulative translation adjustment reserve 1 382 1 412 Retained earnings 7 950 7 123 9 325 8 609 Non-controlling interests 2 9 Total equity 9 327 8 618 Liabilities Non-current liabilities Borrowings 51 22 Deferred income tax liabilities 27 24 Retirement benefit obligations 31 33 Provisions 163 158 Other long-term financial liabilities 188 176 460 413 Current liabilities Trade and other payables 901 948 Current income tax liabilities 403 299 Borrowings 1 4 Derivative financial instruments 90 124 Provisions 153 163 Accruals and deferred income 377 358 Short-term loans 161 62 Bank overdrafts 1 345 764 3 431 2 722 Total liabilities 3 891 3 135 Total equity and liabilities 13 218 11 753 Company Announcement (PDF) Provider Channel Contact Tensid Ltd., Switzerland newsbox.ch Provider/Channel related enquiries www.tensid.ch www.newsbox.ch firstname.lastname@example.org +41 41 763 00 50
Richemont, the Swiss luxury goods group, announces its unaudited
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