Jan. 16 (Bloomberg) -- Cie. Financiere Richemont SA, the maker of Cartier jewelry, reported revenue growth for the final three months of 2013 that was short of analysts’ estimates, failing to meet predictions the worst in China had past.
Sales rose 9 percent excluding currency shifts in the fiscal third quarter, the Geneva-based maker of IWC watches said today in a statement. That’s less than the consensus for 11 percent growth and represents a slowdown from October’s 12 percent growth rate. The stock fell as much as 3.9 percent in Zurich, the steepest intraday decline in six months.
The figures squelched optimism that sales would begin to rebound a year after China began its clampdown on extravagant spending and the use of luxury goods as bribes. Richemont’s specialist watchmaker business grew at a slower rate than the first six months of the year as stores trimmed orders. Johann Rupert, the South African billionaire who controls the company, said Dec. 3 that the global economy is in a “very, very precarious” position.
“There is still destocking happening, especially in Asia, and this shows the retailers are still nervous about the outlook,” Rey Wium, an analyst at Renaissance Capital in Johannesburg, said by phone. “We thought the destocking would come to an end in the second half of 2013, but now it looks like it may only come to an end in the first half of this year. The crackdown in China is still having an impact.”
The shares traded 1.6 percent lower at 87.35 Swiss francs at 10:05 a.m. in Zurich.
Total revenue rose 2.8 percent to 2.94 billion euros ($4 billion). Analysts had expected 3.05 billion euros, according to the average of 17 estimates compiled by Bloomberg.
Last week, Swatch Group AG, the maker of Omega watches, reported a gain in sales in mainland China, boosting optimism that demand in China is rebounding. Richemont Chief Financial Officer Gary Saage said on a Nov. 8 webcast that while he wasn’t calling the bottom on watch sales in Asia, that “the numbers seem to be just a bit better.”
Sales in Asia Pacific rose 6 percent excluding currency shifts, Richemont said. That compares with the median estimate of 8 percent for the region. China was the only major market in that region where revenue declined.
“Compared to retail, slower growth in the wholesale channel reflected caution amongst the group’s business partners, primarily in the Asia Pacific region,” the company said.
Currency moves are putting pressure on profit, Wium said. Exchange rate shifts such as the weakening of the dollar and yen to the euro stripped 5 percentage points off nine-month sales growth.
Richemont doesn’t report third-quarter earnings. It reported a 0.7 percent drop in first-half operating profit in November.
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