Richemont six-month sales up 10%

The growth reflected particularly strong growth in the Europe and Asia-Pacific regions. At constant exchange rates, sales growth was 16%.

Operating profit from the luxury goods businesses rose by 15% to €639 million, reflecting higher sales and continuing tight cost control. Earnings per unit were up 6% to €1.532 from €1.445.

Operating profit from the luxury goods businesses increased by 14% to €639 million and net profit, including the group's share of the results of British American Tobacco, increased by 5% to €864 million.

The group's share of the post-tax profit of BAT decreased by 4% to €320 million. The decrease principally reflected foreign exchange movements compared to the prior period, as the underlying businesses continued to perform well, it said.

Cash generated by the group's luxury goods operations was €224 million.

Richemont unitholders approved the restructuring, involving the separation of the luxury business and the group's tobacco and other interests into two separately-listed entities in early October and the reconstruction was effected on 20 October. These figures therefore reflect the group in its entirety prior to the restructuring, including the interests in BAT.

Executive chairman Johann Rupert said the first half of the year has seen the group's luxury businesses perform very strongly. In particular, the Jewellery Maisons and the Specialist Watchmakers have seen strong growth over the period.

The broad geographic spread of the businesses has been an important factor as continued strong growth in Europe and in Asian markets, in particular China, has offset weaker performances elsewhere.

Richemont's principal businesses are well positioned at the top end of the market for luxury goods. Cartier and Van Cleef & Arpels have benefited from their positioning at the pinnacle of the market for jewellery products, where demand was strong throughout the period. High jewellery sales have been an important factor for both Maisons.

The specialist watchmakers have also seen good demand and new products launched at the Salon International de la Haute Horlogerie in April were well received and the watch Maisons maintained good levels of deliveries.

Sales at Montblanc were in line with the comparative period at actual exchange rates but operating profit declined as the costs of the expanded boutique network were not fully covered.

The Leather and Accessories Maisons reported higher losses during the period.

Looking ahead Rupert said the chaos in financial markets has now inevitably begun to impact the real economy around the world.

"Although our Maisons have seen steady demand in the period through to the end of September, the turmoil experienced in October has started to impact demand for the Group's products. Sales for the month increased by only 1.6% overall compared to October last year."

The stronger yen and dollar contributed to the increase and sales at constant rates were 2% lower for the month. The largest decline was seen in the Americas region, he added.

Although Asian markets continued to grow at a double-digit rate, Europe also registered a decline despite strong sales to non-European customers.

Sales in Japan were also below the prior year in yen terms but showed growthon conversion into euros.

"The resultant effect on the real economy and the loss of the "feelgood" factor that the luxury goods industry relies upon will undoubtedly impact upon sales. Having expected this downturn for some time, Richemont is in a relatively good position to weather the current storm," he said.

He added that Richemont has a strong balance sheet, with adequate cash resources, and has an experienced management team.

"The Maisons have survived recessions and economic turmoil in the past and will certainly survive the difficulties that we are facing today.

"The Group is significantly better positioned to withstand a slowdown in demand, with a broader geographic spread and better financial controls and is much more reactive to the market than it was seven years ago.

"We will take whatever steps may be necessary to limit the negative impact of the slowdown on the Group, recognising that there is no point in taking action for short-term gain to the detriment of our long-term goals and strategy," Rupert concluded.

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