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RICHEMONT ANNOUNCES STRONG PERFORMANCE FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 2022

Compagnie Financière Richemont SA / Key word(s): Half Year Results

11-Nov-2022 / 07:01 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.

To read the full announcement click here: Richemont FY23 Interim results

For a printer-friendly version: Richemont FY23 Interim results PDF EN | Richemont FY23 Interim Results PDF FR (abridged)

Please find below the Highlights and Chairman’s commentary from Richemont FY23 Interim Results Announcement.

Group highlights

  • Strong sales and operating profit from continuing operations of € 9.7 billion and € 2.7 billion, respectively

  • Agreement with FARFETCH and Alabbar to sell a controlling interest in YNAP to create a neutral industry-wide platform and advance the realisation of Maisons’ Luxury New Retail vision; YNAP business reclassified to ‘discontinued operations’

  • Continued progress on sustainability objectives: 10% energy reduction plan implemented in offices and boutiques across Europe; on track to source 100% renewable electricity globally before end of 2025

Financial highlights

  • Sales up by 24% at actual exchange rates and 16% at constant exchange rates, with double-digit increases at actual exchange rates across all business areas and channels

  • Improved momentum in Asia Pacific with sales up 3% at actual rates; double-digit increases in all other regions

  • Growth momentum led by retail, up 30% at actual exchange rates and 21% at constant exchange rates, representing 67% of Group sales

  • Operating profit from continuing operations increased by 26%, delivering improved operating margin of 28.1% driven by:

    • Jewellery Maisons achieving 24% sales growth at actual exchange rates (+16% at constant rates) and delivering a 37.1% operating margin

    • Specialist Watchmakers expanding sales by 22% at actual exchange rates (+13% at constant exchange rates) and achieving 24.8% operating margin

    • ‘Other’ business area (predominantly F&A Maisons) growing 27% at actual exchange rates (+19% at constant exchange rates) and generating a 4.3% operating margin

  • 40% increase in profit for the period from continuing operations to € 2.1 billion; € 2.9 billion loss from discontinued operations primarily resulting from € 2.7 billion non-cash write-down of YNAP net assets

  • Strong net cash position of € 4.8 billion, with € 1.5 billion cash flow generated from operating activities, targeted inventory build-up and increased dividend

Key financial data (unaudited)

Six months ended 30 September

 2022

 2021
 represented*

 change

Sales

 € 9 676 m

 € 7 787 m

 +24%

Gross profit

 € 6 667 m

 € 5 260 m

 +27%

Gross margin

 68.9%

 67.5%

 +140 bps

Operating profit

 € 2 723 m

 € 2 168 m

 +26%

Operating margin

 28.1%

 27.8%

 +30 bps

Profit for the period from continuing operations

 € 2 105 m

 € 1 503 m

 +40%

Loss for the period from discontinued operations

€ (2 871) m

 € (254) m

 

(Loss)/profit for the period

 € (766) m

 € 1 249 m

 

Earnings per ‘A’ share/10 ‘B’ shares, diluted basis

 € (1.337)

 € 2.145

 

Cash flow generated from operating activities

 € 1 540 m

 € 1 781 m

 -14%

Net cash position

 € 4 763 m

 € 3 153 m

 

* Prior-year period comparatives have been represented as YNAP results are presented as ‘discontinued operations’

 

Chairman’s commentary

 

Overview of results

In the first six months of the financial year, Richemont reported another set of strong results as the momentum seen in the first quarter of the financial year continued into the second quarter. Sales from continuing operations increased by 24% to € 9.7 billion and operating profit from continuing operations by 26% to € 2.7 billion.

Compared to the prior-year period, double-digit sales increases were recorded, at actual exchange rates, across all business areas, channels and regions excluding Asia Pacific where sales grew by 3%. Growth was led by the retail channel which, together with the online channel, contributed 73% of Group sales.

In terms of business areas, all grew profitably, with the highest growth rates in sales at +27%, recorded by the ‘Other’ segment mostly composed of Fashion & Accessories Maisons, and the highest profitability at 37.1%, generated by the Jewellery Maisons.

With a 24% sales growth overall and higher sales in all regions and distribution channels, our Jewellery Maisons, Buccellati, Cartier and Van Cleef & Arpels, reaffirmed their leading position. To further support their strong development, manufacturing sites are being expanded, operational teams reinforced, and communication initiatives intensified. Their superior growth was driven by the retail channel, which generated over three quarters of the Maisons’ sales.

Our Specialist Watchmakers expanded sales by 22%, with all Maisons, regions and distribution channels recording growth, a reflection of their strong appeal and the successful ‘iconisation’ of their collections. The Specialist Watchmakers also benefited from an overall growing interest for high quality watches across generations. Three of the Maisons are now of very significant scale, approaching one billion euros in annual sales. Of note is the continued shift in demand towards directly operated stores, both physical and online, and mono-brand franchise stores. Sales in these branded environments accounted for over 70% of the Specialist Watchmakers’ sales. Their operating margin strengthened to 24.8%.

The Group’s ‘Other’ business area, which now includes Watchfinder, saw nearly all Maisons post sharp sales growth across channels and regions. Creativity and execution drove a 27% sales growth and improved profitability of € 56 million. Chloé, Montblanc and Peter Millar, including G/FORE, contributed most to the sales increase. Delvaux generated the sharpest growth rate in sales. We are carefully nurturing this promising Maison for the long term.

At Group level, operating profit and operating margin from continuing operations rose to € 2.7 billion and 28.1%, respectively. Profit for the period from continuing operations increased to € 2.1 billion, benefiting from a strong operating profit and lower net finance costs. The € 2.9 billion loss from discontinued operations reflected the combined result of YNAP for the six-month period and the € 2.7 billion non-cash loss on remeasurement of its net assets to fair value, based on current market data, as a result of the transfer to ‘Held for Sale’. At € 4.8 billion at the end of September 2022, our net cash position remained solid.

Our Luxury New Retail (‘LNR’) partners

The agreement for Farfetch and Alabbar to acquire 47.5% and 3.2% of YNAP, respectively, leaving Richemont holding 49.3%, will realise my long-standing goal of making YNAP a neutral industry-wide platform, with no controlling shareholder. In exchange, Richemont will receive Farfetch shares, expected to represent 12-13% of Farfetch’s issued share capital, to further align interests. Subject to a number of conditions, including the receipt of certain antitrust approvals, the initial stage of the transaction is expected to complete before the end of calendar year 2023. By that point, Richemont Maisons will adopt Farfetch's technology to create the best ‘route to market’ and realise their ‘Luxury New Retail’ vision. We will strive to achieve efficiency, flexibility and speed in addressing our clients’ needs, getting our products to the right place, at the right time, in a seamless manner. Meanwhile, YNAP will adopt Farfetch Platform Solutions to accelerate the shift towards a hybrid model that will significantly enhance its prospects.

Annual General Meeting and Board changes

At the Annual General Meeting (‘AGM’) in September 2022, two valued and long-serving non-executive directors, Ruggero Magnoni and Jan Rupert, stepped down from the Board. They parted with our warmest wishes and I wish to thank them again for their immense contributions to the development of Richemont. The Board’s size has been reduced to 16, with female representation reaching 31%. We expect this ratio to increase further as the Board’s rejuvenation continues to further address age, tenure, skills and representation from the Americas and Asian regions.

We also announced that the process has been launched to select the next Group’s external auditor. Given the complexity of the project, with Richemont being present in over 36 locations, we expect the process to be finalised by late 2024, in time for the 2025 AGM and our shareholders’ approval.

Also at this year’s AGM, a resolution allowing for ‘A’ shareholder representation was voted on for the first time, at the request of a shareholder. This is allowed for under Swiss law, yet had never previously been requested. The Board nominated Wendy Luhabe to this role. She was elected by 84% of the ‘A’ shareholders casting their votes and elected to the Board with 98% supportive votes. Two other proposed items were rejected. The notion of a divided board representing different shareholder factions is alien to our concept of a collegial board, a philosophy which has prevailed since Richemont’s foundation 34 years ago. All non-executive directors have been elected by the majority of ‘A’ shares cast, and by a considerable margin. They all represent ‘A’ and ‘B’ shareholders’ interests.

I would like to heartily thank our long-term shareholders for their overwhelming support. Having dedicated much of my working life to the Group’s development, I am deeply grateful for their loyalty, trust, and support. We can now continue planning for the medium and long term, taking brave actions when needed, to create value for our shareholders, communities and colleagues.

Sustainability

Richemont has a long-standing commitment to doing business responsibly, striving to create benefits for all of its stakeholders. We are currently rolling out a strengthened sustainability roadmap to drive further environmental and social progress within Richemont and its stakeholder community, including suppliers and partners. We have updated key internal policies to ensure that our respect for human rights is embedded into our decision-making processes and over the six-month period have engaged with several NGOs to progress on our revised Human Rights Strategy as well as our biodiversity, climate and circularity policies.

Regarding the topical matter of energy savings, we aim to reach a 10% energy saving on gas and electricity in our offices and boutiques across Europe over the next six months compared to the prior-year period. We are also well positioned to achieve our objective to source 100% renewable electricity ahead of our initial target of the end of calendar 2025.

Outlook

As I conclude my comments, I would like to reiterate my tribute to my personal mentor, the late Maître Jean-Paul Aeschimann, who served with unparalleled distinction as Richemont’s Deputy Chairman for 22 years, from the Group's foundation in 1988 till 2010. Following his advice, we adopted the collegial board model, where all directors serve the interest of all shareholders. That has stood the test of time. His contribution to Richemont was immense and he is sorely missed.

I would also like to thank all the teams at Richemont for their commitment, creativity and operational excellence that have underpinned our strong performance. All our business areas have performed strongly. We have strengthened our sustainability operations and further heightened our sustainability ambition. We have also made major strides in our digital transformation.

It is highly uncertain how the political, economic and social landscapes will evolve in Europe and in our other key markets. We only know that we will likely face volatile times ahead as central banks seek to rein in inflation while governments try to manage severe cost of living pressures. At Richemont, we will continue to be guided by our values, seeking to build value for the long term in a sustainable and responsible manner, not seeking short-term, expedient solutions. The Group is in the fortunate position of being in good health, with a clear strategy, highly desirable and enduring creations, strong Maisons, professional teams and a robust balance sheet. These assets will enable Richemont to weather uncertain times and draw upon strength in demand, allowing us to look to the future with a mix of vigilance and confidence.

 

 

Johann Rupert
Chairman

Compagnie Financière Richemont SA

 

 

About Richemont

At Richemont, we craft the future. Our unique portfolio includes prestigious Maisons distinguished by their craftsmanship and creativity, alongside online distributors that cultivate expert curation and technological innovation to deliver the highest standards of service. Richemont’s ambition is to nurture its Maisons and businesses and enable them to grow and prosper in a responsible, sustainable manner over the long term.

Richemont operates in three business areas: Jewellery Maisons with Buccellati, Cartier and Van Cleef & Arpels; Specialist Watchmakers with
A. Lange & Söhne, Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Panerai, Piaget, Roger Dubuis and Vacheron Constantin; and
Other, primarily Fashion & Accessories Maisons with Alaïa, AZ Factory, Chloé, Delvaux, dunhill, Montblanc, Peter Millar including G/FORE, Purdey, Serapian as well as Watchfinder & Co. In addition, Richemont operates NET-A-PORTER, MR PORTER, THE OUTNET, YOOX and the OFS division. Find out more at https://www.richemont.com/.

 

Disclaimer

This document contains forward-looking statements as that term is defined in the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance. Richemont's forward-looking statements are based on management's current expectations and assumptions regarding the Company's business and performance, the economy and other future conditions and forecasts of future events, circumstances and results. Our retail stores are heavily dependent on the ability and desire of consumers to travel and shop and a decline in consumers traffic could have a negative effect on our comparable store sales and/or average sales per square foot and store profitability resulting in impairment charges, which could have a material adverse effect on our business, results of operations and financial condition. Reduced travel resulting from economic conditions, retail store closure orders of civil authorities, travel restrictions, travel concerns and other circumstances, including disease epidemics and other health-related concerns, could have a material adverse effect on us, particularly if such events impact our customers’ desire to travel to our retail stores. International conflicts or wars, including resulting sanctions and restrictions on importation and exportation of finished products and/or raw materials, whether self-imposed or imposed by international countries, non-state entities or others, may also impact these forward-looking statements. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside the Group's control. Richemont does not undertake to update, nor does it have any obligation to provide updates of, or to revise, any forward-looking statements.

 

© Richemont 2022

This announcement does not contain full details and should not be used as a basis for any investment decision in relation to the Company’s shares. Please find the full announcement available in PDF at this link: https://www.richemont.com/en/home/media/press-releases-and-news/strong-performance-for-the-six-month-period-ended-30-september-2022/


End of Inside Information

Language:

English

Company:

Compagnie Financière Richemont SA

Chemin de la Chênaie 50

1293 Bellevue

Switzerland

Phone:

+41227213506

E-mail:

pressoffice@cfrinfo.net

Internet:

http://www.richemont.com

ISIN:

CH0210483332

Valor:

21048333

Listed:

SIX Swiss Exchange

EQS News ID:

1485041


 

End of Announcement

EQS News Service

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