Richemont Profit Up on Asian Tourists Spending in Europe
Cie. Financiere Richemont SA (CFR), the second-biggest luxury-goods company, reported first-half profit that beat analysts’ estimates on sales of Cartier jewelry to Asian tourists. The company said Johann Rupert will resign from his post as chief executive officer next year.
Net income in the six months through September increased 53 percent to 1.09 billion euros ($1.4 billion), the Geneva-based company said today in a statement. The average estimate of nine analysts surveyed by Bloomberg was 1.02 billion euros. Bernard Fornas and Richard Lepeu will become joint CEOs in April after Rupert, 62, steps down, Richemont also said.
The maker of Jaeger-LeCoultre watches outperformed its August forecast that first-half profit would rise as much as 40 percent as European sales rose 19 percent in local currencies, twice as fast as the pace in the Asia Pacific (APB) region. The weaker euro helped drive profit growth as it boosted sales in Europe to the detriment of China, Richemont said. The company’s operating margin widened 1.5 percentage points to 27 percent.
“The margin was better than expected, driven by pricing power in watches and jewelry, while Asian tourists in Europe remain the growth driver,” said Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich.
The dollar was on average 13 percent higher against the euro during the period.
Rupert, the company’s controlling shareholder and chairman, became CEO in 2010 after Norbert Platt, who had held the job since 2004, stepped down. Richemont named Lepeu as deputy CEO and Gary Saage as chief financial officer in 2011. Fornas has led Cartier for a decade and Richemont said he would leave his position of CEO of that brand at the end of this year.
The Swiss company said it expects the foreign currency impact to become “less favorable” during the second half of the financial year.
Sales in October increased 7 percent in local currencies after first-half revenue rose 21 percent to 5.11 billion euros, or 12 percent excluding currency shifts.
The growth in October “looks reasonable,” Cox said. Still, “it appears Asia and Americas local currency sales declined in October, which some might highlight as a negative.”
Revenue from the company’s watch division climbed 25 percent to 1.46 billion euros, beating the 1.45 billion euro average estimate of 15 analysts surveyed by Bloomberg. The maker of Vacheron Constantin timepieces got more than a quarter of its sales in the six months through September from specialist watchmakers.
Sales from Richemont’s jewelry unit increased 20 percent to 2.61 billion euros, trailing analyst estimates of 2.63 billion euros. The division generates about half the company’s sales. Richemont also gets revenue from businesses including Purdey, the luxury hunting gun maker founded in 1814, and Alfred Dunhill, the London-based maker of leather goods, fashion and lighters.
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