Profits rocket for Richemont
Richemont, the Geneva-based luxury goods maker, has seen its net profit rise by a third over the past financial year, reaching €881 million (SFr1.35 billion).
Demand for its wares is gaining pace again after epidemics and war in the Middle East suppressed spending in recent years.
The maker of Cartier jewellery and watches as well as Lancel handbags said operating earnings rose 71 per cent to €505 million in the year to end-March, meeting market expectations.
Richemont’s net income included a €468-million contribution from its stake in the world’s second-biggest cigarette maker, BAT.
Analysts at the HSBC bank noted Richemont’s “strong 2004/05 results and impressive start to the current year”.
Ten analysts polled by the Reuters news agency had on average expected Richemont to report earnings before interest and tax of €502 million. Net profit was seen at €845 million.
Restructuring
Analysts noted loss-making leather goods brands Lancel and Dunhill proved a dull patch in the otherwise sparkling results, but Richemont’s management underscored its commitment to restructuring rather than selling the lacklustre labels.
“I think we have got to fix it, it’s as simple as that,” said chairman Johann Rupert, putting paid to speculation the firm was set on a divestment spree one week after it announced the sale of men’s clothing subsidiary Hackett Ltd.
“We do need to expand in the leather goods business,” Rupert added. The firm announced that Simon Critchell, chief executive of Alfred Dunhill, had resigned and would be replaced by Christopher Colfer.
Rumours of a shake-up at Richemont have swirled in recent weeks, with market players speculating the firm might sell its stake in BAT to finance a major acquisition.
Richemont, built out of a South African tobacco dynasty, owned 18.3 per cent of BAT at the end of March, compared with 19.6 per cent a year earlier.
The firm, the world’s second biggest luxury goods group, competes with the world’s biggest luxury-goods maker LVMH, and with Italy’s Bulgari. It proposed a total dividend payout of €1 euro per share, including a special dividend of €0.50.
Recovery
Richemont testified to recovering momentum in the industry as it reported a 15 per cent increase in sales in April and May and struck a cautiously optimistic note for the full-year.
“Notwithstanding the relatively strong euro, we are optimistic that, barring unforeseen developments, the year ahead will be a good one for the group,” Richemont said in a statement.
Demand for luxury goods has picked up after the deadly Sars virus in Asia and the war in Iraq put the dampeners on consumer spending.
Shares in Richemont, which have rallied sharply this month, rose by 1.6 per cent to SFr41.3 by mid-afternoon on Thursday.
The company’s Swiss-listed shares have outperformed the DJ Stoxx European retail index by nearly five per cent since the start of the year.
swissinfo with agencies
During the 2004/2005 financial year ending in March, Richemont made a net profit of €881 million, up 33 per cent.
Over half the profit (€468 million) came from the company’s shareholding in British American Tobacco.
Full-year revenues reached €3.7 billion.
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