Richemont reports higher profits

The world’s second-largest luxury goods maker, Richemont, has reported a 2003 net profit of €660 million (SFr998 million), up three per cent on the previous year.

The Swiss group – which includes the Cartier and Montblanc brands – said operating profit rose 14 per cent to €296 million, slightly above market expectations.

Analysts said the Richemont results could be taken as an indicator of the health of the luxury goods sector, which is emerging from a three-year recession.

Richemont’s earnings in the 2002-2003 financial year were badly affected by the war in Iraq and the effects of the Sars virus.

The company reported a buoyant start to the new financial year with sales in April and May rising 23 per cent and 21 per cent respectively.

But it took a cautious line on expectations for the remainder of the year.

Turnaround

“It is still too soon to assess what the impact of the two months will be,” said finance director Richard Lepeu. “We can say it confirms the turnaround begun in December especially in Asia, America and Europe.”

The firm reported at the end of April that sales in 2003 fell eight per cent to €3.4 billion amid a downturn in the travel industry and negative currency effects.

Shares in the group have risen by 11 per cent this year as Richemont continues a restructuring operation aimed at cutting costs.

As part of that restructuring, the company in 2003 closed two watch assembly units in Switzerland with the loss of 200 jobs.

It has also shut down unprofitable shops, particularly those belonging to the Dunhill and Lancel brands.

swissinfo with agencies

richemont

Richemont said net profit rose 3% in 2003 to €660 million (SFr998 million).
Operating profit was up 14% at €296 million.
In April, the company reported that sales for the year were down 8% at €3.38 billion.
In April and May 2004, sales rose 23% and 21% respectively.