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Investors appear unfazed by Richemont's dismal profit

Richemont's share price jumped as much as 7.8% on Friday morning despite reporting halved net profit.
Picture: AFP
The luxury brand group’s interim sales fell 13% to €5bn and net profit plunged 51% to €540m in the six months to end-September, its results statement said.

The sharp drop in profit was due to one-off costs of €249m, which included inventory buy-backs of slow moving products, chairman Johann Rupert said in his commentary.

"Excluding these one-time charges, operating profit would have declined by 25%," Rupert said.

Its jewellery "Maisons" — Cartier, Van Cleef and Arpels and Giampiero Bodino — suffered a 13% drop in sales to €2.8bn.

Sales at its specialist watchmakers division fell 17% to €1.4bn.

"This largely reflected a difficult environment for watches, in particular in the wholesale channel," Richemont said.

Its "other" division, which includes Montblanc and various fashion and accessories brands, managed to hold sales nearly flat at €886m, a 1% decline from the matching period’s €895m.

Richemont’s largest market is Asia-Pacific excluding Japan, which contributed €1.8bn, or 35%, of the group’s total sales. This was 10% lower in euros and 8% lower in Asian currencies.

Europe contributed €1.6bn, or 31 % of overall sales, down 18% from the matching period.

"European countries saw a decline in sales after a strong performance in the prior period. France was particularly affected by a significantly lower level of tourist activity. The UK, however, enjoyed double-digit growth rates in sales following the EU referendum," the statement said.

In Japan, sales fell 11% to €477m. Measured in yen, sales plunged 22%. Richemont said a strong yen caused all product categories to suffer.

A strong dollar led to its Americas division suffering a 7% sales drop to €821m.

The group has not paid an interim dividend since 2011.

"We remain convinced of the long-term prospects for high quality products, in particular for watches and jewellery. Our Maisons stand for timelessness, quality and craftsmanship — values that are particularly sought after in uncertain times," Rupert said.
Source: BDpro

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