Richemont increases earnings as expected

Swiss luxury goods group Richemont on Thursday reported a 33% increase in earnings per unit for the year ended March 31 to €1,588, from €1,193 a year ago.

The board has recommended the payment of a total dividend of €1 per unit—comprising the regular dividend of €0,50 per unit and a special dividend funded from the proceeds of the liquidation of the British American Tobacco (BAT) preference shareholding of €0,50.

In rand terms, basic earnings per depositary receipt amounted to 126 cents—a 25% rise from a year ago and in line with expectations.

Richemont owns a portfolio of international luxury brands, including Cartier, Van Cleef & Arpels, Piaget, Montblanc, Dunhill and Lancel, as well as the prestigious watch manufacturers Jaeger-LeCoultre, Baume & Mercier, IWC, Vacheron Constantin, A Lange & Söhne, and Officine Panerai. One of its principal sources of income is its 18% effective stake in global tobacco giant BAT.

Richemont reported a 10% rise in sales to €3,717-billion, while operating profit was up 71% to €505-million.
The group reported a 33% rise in net profit to €881-million.

The group said the recovery in sales seen in the first half of the year continued into the second half-year and higher sales resulted in a significantly higher gross margin contribution, while operating expenses grew by only 5%.

Richemont’s share of the net profit of BAT, before goodwill amortisation and exceptional items, grew by 11% to €468-million. This was despite the group’s reduced effective interest in BAT during the year.

Looking ahead, executive chairperson Johann Rupert said the pattern of steady sales growth seen in the first quarter of 2005 has continued into the months of April and May, when sales overall have increased by 15% at actual exchange rates.

The watch businesses, in particular, have continued to show strong levels of growth in the first two months of the current financial year.

The Asia-Pacific and Americas regions have been the principal drivers of growth, although Europe has also produced double-digit growth during the period, he said.

“Notwithstanding the relatively strong euro, we are optimistic that, barring unforeseen developments, the year ahead will be a good one for the group,” he said.

“While we cannot control the external market environment, we are hopeful that the positive sales trends seen during the year gone by and in recent months will continue.”

He added that the steps taken and those still being implemented to optimise operations and improve effectiveness will continue to benefit the group.

“We will do our utmost to ensure that the central and regional service functions are optimally structured to service the needs of the maisons and that they, in turn, are well positioned in terms of creative design, new products and resources to allow Richemont to grow and prosper in the current financial year and in the years ahead,” he said.—I-Net Bridge

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