Compagnie Financière Richemont was one of the biggest downward movers on the JSE on Friday following the release of financial results that showed its interim profit had fallen a fifth.
The share, a favourite among institutional investors, closed 5% lower at R2417.94, making it one of the top 5 major declines on the JSE on Friday. The share is little changed from the R2 200.00 that it traded at on the JSE a year previously.
Interim results for the Switzerland-based group, which is chaired by South African billionaire businessman Johann Rupert, showed that profit from continuing operations fell 20% to €1.73 billion (R32.6bn) from €2.16bn.
Also, in a reflection of the tough markets worldwide where consumers have seen disposable incomes pared by high interest rates and inflation, low growth and geopolitical uncertainty, even for buyers of Richemont’s luxury jewellery, watches, leather goods and accessories, group sales fell a percent to €10.08bn.
Nevertheless, directors described the top-line performance as “resilient”, and which had been supported by a balanced geographical mix and mid-single digit growth at jewellery Maisons.
“The group recorded very solid sales progress in most regions, led by the Americas and Japan in value, which grew 10% and 32% respectively at actual exchange rates,” said Rupert.
Europe and Middle East and Africa regions also posted “robust growth”, he said.
Specialist Watchmakers reported a 17% decline in sales at actual exchange rates. Jewellery Maisons saw sales up by 2% at actual exchange rates.
The group brands include Cartier, Van Cleef & Arpels, Piaget and Jaeger-LeCoultre. The decline in sales was mainly due to weaker demand in the Asia-Pacific, primarily China.
Operating profit fell 17%, or by 12% at constant exchange rates. The cash position was solid at €6.1bn. Limited price increases in recent months was not enough to offset raw material cost increases, notably gold.
A €1.3bn loss from discontinued operations was mainly due to the non-cash write-down of online luxury and fashion retailer YOOX Net-a-Porter Group (YNAP). The sale of YNAP to luxury multi-brand digital group Mytheresa for 33% of Mytheresa’s shares was announced on October 7.
“What we are seeing in the world today is not unprecedented,” said Rupert.
“It illustrates just how important it is to have strong leadership with a long-term vision, to continue to invest in our Maisons...to manage our offer with discipline and to have an agile structure and a solid balance sheet. I am confident in our ability to navigate the current as well as future business cycles.”
BUSINESS REPORT