Richemont Owner Johann Rupert’s Sabbatical Days Are Numbered

If Johann Rupert hasn’t yet learned fly-fishing, he better do so soon.

Richemont, the Swiss owner of 20 luxury businesses including Cartier, said the 63-year-old South African billionaire, who’s on a yearlong break, will stand for chairman when the sabbatical ends in September. Rupert, who spent 25 years building the luxury-goods maker by combining brands like Cartier and Montblanc, last year announced he wanted time off to catch up with his reading list and to learn fly-fishing.

The announcement of Rupert’s return “ends some uncertainty whether he would come back or not, if there were perhaps health issues,” Jon Cox, an analyst at Kepler Cheuvreux in Zurich, said by phone. “He steps in again when things have not been going too well. In the past, as executive chairman, he was very hands-on when there was any deterioration in profit.”

Richard Lepeu and Bernard Fornas became co-chief executive officers in April 2013 after Rupert, the company’s controlling shareholder, gave up his CEO role. Rupert served three stints as CEO, returning to the company in 2003 to steer the company through a slump in revenue related to the spread of Severe Acute Respiratory Syndrome in Asia, and in 2010 when Norbert Platt resigned for health reasons.

Dividend Increase

The Geneva-based company also announced little-changed full-year earnings and a 40 percent dividend increase. The company, which had cash of 4.66 billion euros ($6.4 billion) at the end of March, said it plans to raise its dividend to 1.40 Swiss francs a share, exceeding the Bloomberg forecast of 1.15 francs.

The stock rose as much as 5.6 percent in Zurich, the biggest intraday gain in a year. The shares traded 5.5 percent higher at 92.05 francs at 12:54 p.m., giving the company a market value of 52.9 billion francs ($59 billion).

Operating profit was little changed at 2.42 billion euros in the 12 months through March as sales in mainland China declined due to the crackdown on extravagant spending among government officials, the company, whose full name is Cie. Financiere Richemont SA, said.

No Gifts

Richemont got 40 percent of its sales from the Asia-Pacific region. Sales in mainland China dropped, while revenue growth in Richemont’s Europe unit moderated to a “high single-digit” rate. The practice called “gifting” in the Chinese market cut as much as 20 percent to 30 percent from sales of some brands there, executives said on a conference call.

Revenue gained 5 percent to 10.7 billion euros. Exchange-rate shifts such as the weakening of the dollar to the euro stripped 5 percentage points off sales growth. Sales in April rose 6 percent excluding currency fluctuations.

Richemont owns about 20 businesses, most of which are at least a century old, including Vacheron Constantin, a Swiss watchmaker founded in 1755, and Purdey, a luxury shotgun maker formed in 1814. The most recent business addition is Giampiero Bodino, an Italian high-end jeweler that only sells by appointment.

Restructuring at Montblanc, which reduced some points of sale and had a 5 percent drop in sales, led to provisions of 25 million euros, Richemont said. The company plans capital expenditure of 900 million euros this fiscal year and about 825 million euros in the following period, Chief Financial Officer Gary Saage said.

When asked if Richemont’s management have enjoyed Rupert’s hiatus so far, Saage joked it would be a “career-ending move” if he answered.

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